Yara Integrated Report 2020
Growing a climate positive food future The food system comes with an enormous hidden cost. We • By providing innovative and resource efficient digital tools Growing a have shattered the planetary boundaries, creating a climate suitable for any farmer around the world emergency. • By developing fossil-free and low-carbon fertilizers climate positive • By driving initiatives that will incentivize farmers to Yara operates a global leading ammonia and nitrates sequester carbon and thereby create green revenue streams capacity, and we are the only truly global crop nutrition food future • By using technology to help consumers make low-carbon company. Our crop nutrition solutions, digital capabilities choices and deep agronomic knowledge are what enable us to work towards a climate positive future. We are focusing our efforts on decarbonizing food and building a resilient and fair food To succeed in this, we are leading the way in a behavioral system, while also using our knowledge to decarbonize other shift, towards stronger public-private partnerships, open energy intensive industries and supporting a clean hydrogen data platforms and the creation of truly shared value. Yara economy. We do this in a number of different ways: is a company driven by knowledge, science, and a strong sense of purpose. We aim to build long-term value while delivering on the UN Sustainable Development Goals.
This is what we mean, when we speak about our ambition of growing a climate-positive food future. Key figures ROIC (Percent) TRI 2.5 10 2.5 8.0 8.0 8 2.0 1.8 About Yara 6.60 Yara grows knowledge to responsibly feed the 1.4 1.4 1.3 world and protect the planet. Supporting our 52 NOK 6 1.5 vision of a world without hunger and a planet 4.00 3.80 respected, we pursue a strategy of sustainable 4 1.0 value growth, promoting climate-friendly crop Total cash returns per share nutrition and zero-emission energy solutions. 16,818 paid and proposed for 2020 2 0.5 Yara’s ambition is focused on growing a climate employees positive food future that creates value for our 0 0 customers, shareholders and society at large 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 and delivers a more sustainable food value chain.
1) See page 249 for definitions, To achieve our ambition, we have taken the 2020 2019 explanations and reconciliations of lead in developing digital farming tools for Return on invested capital alternative Performance Measures (APMs). precision farming, and work closely with 8.0% (6.6% in 2019) 1) Prosperity performance 2) EBITDA, as defined by Yara, partners throughout the food value chain to Revenue and other Income USD million 11,728 12,936 includes operating income, interest income, other financial improve the efficiency and sustainability of 1) Operating income USD million 1,176 989 income and share of net income food production. Through our focus on clean in equity-accounted investees. It EBITDA 1) 2) USD million 2,223 2,095 ammonia production, we aim to enable the MUSD excludes depreciation, amortization and impairment loss, as well as hydrogen economy, driving a green transition Operating income (989 in 2019) 1) Net income attributable to 1,176 shareholders of the parent USD million 691 599 amortization of excess values in of shipping, fertilizer production and other equity-accounted investees. 3) energy intensive industries. Investments USD million 933 1,134 3) Investment in property, plant and equipment, long-term securities, Debt/Equity ratio 1) 4) 0.36 0.42 intangibles, long-term advances Founded in 1905 to solve the emerging famine and investments in non- Diversity and inclusion index Net cash flow from operations USD million 2,047 1,907 consolidated investees. in Europe, Yara has established a unique position 4) Net interest-bearing debt divided (73% in 2019) Basic earnings per share 5) USD 2.58 2.2 as the industry’s only global crop nutrition 74% by shareholders’ equity plus non- company. We operate an integrated business controlling interests. People performance 5) Yara currently has no share-based model with around 17,000 employees and compensation program that results operations in over 60 countries, with a proven Engagement rate Percent 79 73 in a dilutive effect on earnings per million tonnes share. track record of strong returns. In 2020, Yara Per million 6) TRI: Number of Total Recordable Scope 1+2 CO e emissions 6) reported revenues of USD 11.6 billion. 2 TRI rates hours worked 1.3 1.4 Injuries per million hours worked, 1 7.7 (18.5 in 2019) contractors included. Planet performance 7) The GHG intensity indicator covers scope 1, 2 and parts of scope 3 GHG/tonne emissions from suppliers, but does SHORTCUT GHG intensity 7) produced 3.0 3.0 not represent a complete carbon Go to the Financial footprint. Measured against tonnes Energy use 7) Petajoules 279 285 nitrogen in Yara’s products. Statements for 2020 here Global presence
Yara is the industry’s most global player. We combine production of premium products with a farmer-centric approach, turning a century of agronomic knowledge into value for millions of farmers around the globe.
Yara-branded retail outlets around the world 10,800 +
Countries with Countries with sales operations
Countries with sales ) 60 160 Yara Plants Smaller sites 2)
Production plants Terminals, warehouses, blending Phosphate mines units and bagging facilities Joint ventures and R&D sites
Digital Hub Countries with sales 1) Yara Plants Phosphate mines Sales offices, R&D sites 1) More than 10,800 Yara-branded retail outlets around the world Head office Smaller sites 2) Joint ventures Digital Hub 2) Yara operated terminals and logistical 28 200 production sites ) More than 10,800 Yara-branded retail outlets around the world 2) Yara operated terminals and logistical production sites Yara Integrated Report 2020 Content
01 THIS IS YARA
02 YEAR IN REVIEW 01 02 03 04
03 FROM THE BOARDROOM THIS IS YARA YEAR IN REVIEW FROM THE BOARDROOM FINANCIAL STATEMENTS
04 FINANCIAL STATEMENTS Broadening Responsible Delivering on our Transparent our core performance commitment performance
CEO message 07 PEOPLE 40 Corporate governance 76 Consolidated financial statements 110 2020 Highlights 10 Women in Agronomy 41 Group Executive Board 90 Financial statements for Yara International ASA 214 Company presentation 11 People performance 43 Board of Directors 94 Statement from the Board and the How we create value 13 People risks 46 Board message 99 CEO of Yara International ASA 241 Partnering for people, planet Risk management 108 Auditor’s report 244 and prosperity 14 PLANET 48 Reconciliation of alternative Megatrends 17 Making digital farming simple 49 About the report performance measures in This is Yara International ASA’s 2020 Planet performance 50 Our strategy 19 the Yara Group 249 Integrated Report. It represents Yara’s first Planet risks 53 integrated report, building on the guiding Strategic goals 24 principles set out in the International
External framework guidance 72
Copyright ©2020 Sustainalytics. All rights reserved. This [publication/ article/ section] contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an Listed as one of the 100 most sustainably One of 12 leading companies in a review of Number one in a review of ESG disclosures Won the Stockman award Medium risk and number one of 56 endorsement of any product or project, nor an investment advice and are not warranted to managed companies in the world 305 food- and agribusinesses from the 100 largest companies on the Oslo for best IR team amongst all Agri-Chemicals companies be complete, timely, accurate or suitable for a particular purpose. Their use is subject to Stock Exchange Norwegian listed companies conditions available at https://www.sustainalytics.com/legal-disclaimers. Yara Integrated Report 2020
01 THIS IS YARA THIS IS YARA
CEO message 2020 Highlights Broadening Company presentation How we create value our core Partnering for people, planet and prosperity Megatrends Our strategy We are broadening our core as a leading food Strategic goals solutions company, based on driving sustainable Strategic risks performance. Utilizing our position as a global Clean Ammonia opportunities leading ammonia company, we will enable the Managing outcomes hydrogen economy. Engaging with our stakeholders Materiality
02 YEAR IN REVIEW
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
06 Yara Integrated Report 2020 CEO COMMENT The true value of being 01 THIS IS YARA purpose driven CEO message 2020 Highlights Company presentation Last year was truly extraordinary, and we had to tackle it through How we create value an exceptional effort. It has been said that a crisis shows what Partnering for people, planet you’re made of, that it shows your true colors. When faced with a and prosperity seemingly impossible task, you can either back down and give up Megatrends or you can roll up your sleeves and tackle it head on. In Yara, we Our strategy did the latter, and that is why I was both proud and very satisfied Strategic goals when we closed the books on a year that will go down in history Strategic risks as an annus horribilis. Clean Ammonia opportunities Managing outcomes Engaging with our stakeholders A triple responsibility Materiality From the very start of the Covid crisis, we were clear on Yara having a triple responsibility; Firstly, to safeguard our employees and con- 02 YEAR IN REVIEW tractors. Secondly, to be a responsible business and behave according to government guidelines. And thirdly, to run our operations in a way “I was proud and 03 FROM THE BOARDROOM that ensured that our business could continue to help feed the world, very satisfied when we also in times of crisis – if not, we could have experienced a reduction 04 FINANCIAL STATEMENTS closed the books on a of 50% in crop yield. year that will go down Thanks to the dedication and efforts by our more than 16,000 in history as annus employees, we managed to keep our plants running and made sure horribilis.” our lifesaving products reached farmers at a crucial point in time. In my view, this shows the true value of being a purpose driven company. Working in such a company encourages all of us to go those many
07 extra miles, to make sure we deliver. • Yara Integrated Report 2020 In Yara’s case, we know that our solutions contribute discipline, we are also able to invest in growth areas, such directly to solving some of the biggest challenges of our as green ammonia, utilizing our number one positions as time. Our nitrate-based crop nutrition solutions not ammonia producer, trader and transporter. 01 THIS IS YARA only increase the yield for the farmers but do so in the most resource efficient way. Our digital tools also make Food as a foundation for peace CEO message agronomic knowledge available to smallholder farmers – Looking back, the pandemic revealed a broken food 2020 Highlights knowledge that earlier was reserved for only the largest system, hitting hardest those that were already most vul- Company presentation commercial players – thereby contributing to fighting nerable. It put food production and food supply front and hunger and poverty. In short, our solutions lead to more center of the global discourse. Adding to this, the Nobel How we create value food, reduced waste, increased livelihood in vulnerable Peace Prize was awarded to the World Food Programme. Partnering for people, planet communities and making carbon positive farming a reality. It confirmed how food is the foundation for peace and and prosperity stability, and why it is crucial to build a fair and resilient Megatrends Doing well by doing good food system. Our strategy In Yara, we do well by doing good. We believe shareholder Strategic goals value creation is higher when the perspectives of people, It is especially encouraging for us in Yara to see the Strategic risks planet and prosperity are combined, and in 2020 we celebration of WFP’s great work, as we have joined forces Clean Ammonia opportunities improved our employee engagement and continued to both in the fields and on global arenas to bring about 40,000 reduce our GHG emissions. Our volumes of premium systemic change. When I spoke with WFP Executive Managing outcomes tonnes fertilizer products are increasing and the results of our investments Director David Beasley in April last year, asking him how Engaging with our stakeholders donated to aid 250,000 farmers in digital solutions are showing exponential growth. Last Yara could contribute in the pandemic, he was crystal in East Africa during the pandemic Materiality year was also a year that once again demonstrated the clear: “Make sure you get your product out to the farm- strength of our integrated business model. By channeling er”. If not, the health crisis could be followed by a hunger 02 YEAR IN REVIEW products also to our Industrial Solutions units, we are able catastrophe “of biblical proportions,” as he put it. to optimize production streams and create added value. 03 FROM THE BOARDROOM A month later, we established Action Africa, supported With this in mind, it also feels rewarding to continue to by the WFP – a relief program to reach 250,000 farmers 04 FINANCIAL STATEMENTS deliver improved prosperity through improving capital re- in the most vulnerable parts of East Africa with 40,000 turns for 10 consecutive quarters and improving our free tonnes of donated premium fertilizers to provide food for cash flow by USD 1.4 billion compared to 20191) . This 1 million people for a year. has enabled us to increase the level of dividend, even in such a challenging year as 2020 was, with total dividends Through this, we have also managed to create a digital and share buybacks committed or paid at NOK 52/share. platform, reaching 2 million smallholder farmers with Through our strong focus on capital allocation and agronomic support and advice.
08 1) Net cash provided by operating activities minus net cash used in investing activities in Consolidated statement of cash flows. Yara Integrated Report 2020 Our widened responsibility view. We must make use of all the talent in the com- A company cannot be evaluated solely on financial results pany, from all backgrounds, to be able to solve the in an isolated period. More important is the long-term challenges ahead. Safe and satisfied employees with a “Food is a 01 THIS IS YARA value creation, and it is our firm belief that there is significant degree of autonomy leads to satisfied cus- foundation no contradiction between purpose and profit. In fact, tomers, which in turn leads to satisfied shareholders. for peace and CEO message having a clear purpose and operating in a sustainable It’s as simple as that. stability” 2020 Highlights way, is a pre-requisite for sustaining profit. Company presentation I urge every one of our stakeholders – be it investor or The past years, and in particular last year, it has regulator – to study our comprehensive Sustainability How we create value become evident that the boundaries for a company’s Report, to learn more about how we have integrated Partnering for people, planet responsibility expands way beyond what has been the these aspects into our business. and digital tools, we are able to accelerate carbon and prosperity norm under the “business as usual”- model that positive farming, by making agriculture more resource Megatrends dominated for many decades. This is something we Low carbon opportunities efficient, productive and environmentally friendly; Our strategy have embraced in Yara. In addition to centering our Yara operates in an environment that is affected by through dedicated partnerships, we are introducing Strategic goals business model around the UN Sustainable Development strong external forces and megatrends. A wave of new full transparency in the food value chain and thereby Strategic risks Goals, we have also introduced global standards and regulatory and political initiatives aimed at addressing creating green revenue streams for the farmers and fi- Clean Ammonia opportunities benefits for our employees, to bridge the gap between climate change are coming. However, the climate nally enabling carbon labelling of food, to let consum- the safety net we have in some countries and the emergency is wider than only GHG emissions, as ers make carbon positive choices; through our ammo- Managing outcomes complete lack of safety net in other countries. more scrutiny is also being put on biodiversity, water nia expertise and global infrastructure, we will drive Engaging with our stakeholders usage and soil health. Another strong force for change the commercialization of green ammonia and open the Materiality That is why we, for example, introduced an income is consumer demand, combined with strong actions gateway to a clean hydrogen economy. security policy, guaranteeing all employees and full-time taken from food companies, which the past years have 02 YEAR IN REVIEW contractors up to three months’ pay in this challenging launched targets for climate-neutrality. Despite an extremely challenging 2020, there is now crisis. Another example, is a new global minimum a unique opportunity worldwide to rebuild the world 03 FROM THE BOARDROOM standard for parental leave, covering 6 months full With great shifts come great risks and great oppor- economy. Making it more inclusive, more sustainable pay for primary caregiver and 1-month full pay for tunities, and we have the strategy both to mitigate and more resilient. 04 FINANCIAL STATEMENTS secondary caregiver. A third example is our work on these risks while acting on the opportunities. Going diversity and inclusion, which includes a specific forward we have two very clear strategic priorities: Yara has the dedication and roadmap to play our part. project related to black talent. Accelerating operational excellence and expanding our reach and offering. Ten years ago, many of these efforts related to diversity and inclusion, would most likely only see the cost A key word for us, will be decarbonization. Yara is Svein Tore Holsether element of these measures. But today, it is obvious that dedicated to working for a carbon free future, and this President and CEO
09 this makes sense also from a pure business point of will materialize in several ways; through technology Yara Integrated Report 2020 2020 Highlights 01 THIS IS YARA
CEO message 2020 Highlights Company presentation Q4 Q1 Q1 How we create value • Commitment letter for setting Science • Sustaining operations through Partnering for people, planet Based Target on GHG emissions Covid-19 is a top priority and prosperity • Total NOK 52 per share cash returns • Turnarounds, improvement and proj- Megatrends paid and proposed for 2020 ect activity optimized to reduce risk Our strategy • Taking steps to enable the hydrogen • Decision to develop “Industrial Strategic goals economy, establishing Yara Clean Holding” within Yara Strategic risks Ammonia 1) • Yara and IBM launched an open col- Clean Ammonia opportunities • 8.0% ROIC, up from 6.6% a laboration for farm and field data to year earlier advance sustainable food production Managing outcomes Q4 • ESG Seminar with strategy update Engaging with our stakeholders 2020 Materiality Q3 Q2 Q2 02 YEAR IN REVIEW • Record NPK deliveries • Action Africa strengthens food 03 FROM THE BOARDROOM • USD 2.5 billion free cash flow rolling security in East Africa during four quarters 2) COVID-19 04 FINANCIAL STATEMENTS • Yara receives top score for ESG • Yara moves to regional in annual reporting organizational structure • Yara initiates share buy-back • COVID-19 response: Paid sick leave • Completion of Qafco transaction and guaranteed full pay for three Q3 months in case of temporary layoffs
10 1) The ambition was launched in December 2020, while the business unit was established in February 2021. 2) Net cash provided by operating activities minus net cash used in investing activities in cash flow statement Q3 report. Yara Integrated Report 2020 COMPANY PRESENTATION Our new organizational structure reinforces strategy execution. Empowering local operations, strengthening The organization accountability and driving customer centricity. 01 THIS IS YARA
CEO message 2020 Highlights Company presentation How we create value Partnering for people, planet Yara International ASA and prosperity Svein Tore Holsether Megatrends Our strategy Strategic goals
Strategic risks Chief Financial Officer Legal & HR Clean Ammonia opportunities Lars Røsæg Kristine Ryssdal Managing outcomes Engaging with our stakeholders Materiality Farming Solutions Communications & Procurement 02 YEAR IN REVIEW Terje Knutsen Pablo Barrera Lopez
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS REGIONAL UNITS
Global Plants & Clean Ammonia Industrial Solutions Europe Africa & Asia Americas Operational Excellence Magnus Ankarstrand Jorge Noval Tove Andersen Fernanda Lopes Larsen Chrystel Monthean Pål Hestad
11 Yara Integrated Report 2020 COMPANY PRESENTATION Our three regional units Europe, Americas and Africa & Asia, operate in a fully integrated setup, comprising production, supply chain and Regional units commercial operations, producing and delivering Yara’s existing 01 THIS IS YARA fertilizer solutions in addition to commercializing and selling new offerings under the guidance of Farming Solutions. CEO message 2020 Highlights Company presentation How we create value Partnering for people, planet and prosperity Megatrends Our strategy Strategic goals Africa Strategic risks Tove Andersen Chrystel Monthean Americas Fernanda Lopes Larsen Clean Ammonia opportunities Europe EVP, Europe Americas E V P, A mericas & Asia EVP, Africa & Asia Managing outcomes Engaging with our stakeholders Materiality Deliveries 10,116 Deliveries 14,108 Deliveries 4,821 thousand tonnes thousand tonnes thousand tonnes 02 YEAR IN REVIEW
03 FROM THE BOARDROOM EBITDA EBITDA EBITDA 04 FINANCIAL STATEMENTS 477 563 162 USD million USD million USD million
Employees 3,380 Employees 6,665 Employees 1,797
12 Yara Integrated Report 2020 HOW WE CREATE VALUE Our business model combines production, sales and marketing in one, global system. It enables us to deliver premium products, share knowledge and develop innovative From field to fork solutions to farmers, distributors and food value chains worldwide. 01 THIS IS YARA
CEO message 2020 Highlights INPUT We produce We supply We deliver OUTPUT Company presentation We employ We create How we create value Partnering for people, planet Yara employs an array of resources We produce a Our global footprint enables We deliver complete crop and prosperity and assets to create value and deliver comprehensive range of consistent and reliable nutrition solutions for the on our mission. nitrogen-based fertilizers deliveries to customers farming community and Megatrends and industrial products. worldwide. food industry, as well as Our strategy nitrogen-based solutions for People Energy Materials industrial use. Strategic goals A safe and inspiring • Natural gas • Minerals to workplace, helping to Strategic risks to produce produce crop feed 262 million people Clean Ammonia opportunities ammonia nutrition Managing outcomes Crop nutrition solutions Infrastructure Knowledge Engaging with our stakeholders Materiality • 28 production • Unique agronomic plants and industrial Planet • 200 infrastruc- knowledge Grower needs Sustainable farming and 02 YEAR IN REVIEW ture points • 16.818 and insight food solutions, based on globally employees ambitious climate targets 03 FROM THE BOARDROOM • 10,800 representing Yara-branded great diversity 04 FINANCIAL STATEMENTS retail outlets Production Distribution Farmer worldwide • # 1 producer of nitrates • Global network of sales • Sales to 20 million farmers Financials Brand and NPK offices, terminals and • Agronomists worldwide • # 2 producer of ammonia warehouses • Complete package of Prosperity • Strong track • Global • Flexible and scalable • Timely deliveries aligned premium products, record recognition Superior shareholder production system with crop cycles and knowledge and digital tools • High credit rating • Quality and returns from efficient demand for modern farming • Liquid share reliability operations along with new and greener revenue 13 streams. Yara Integrated Report 2020 CASE Partnering for people, 01 THIS IS YARA planet and prosperity CEO message 2020 Highlights In a new farm-level pilot project, Nestlé and Yara are Company presentation “Although collaborating to improve sustainability, productivity, and How we create value still early days, profitability in dairy farming. Partnering for people, planet the results so far and prosperity have been very Megatrends promising for Our strategy all partners A 2019 Food and Land Use Coalition report concluded that the food Strategic goals – the farmer, system destroys more value than it creates, due to hidden costs related Strategic risks to health, environment, food waste and rural welfare. Nestlé and Clean Ammonia opportunities Yara” If we don’t compensate farmers for the increased costs related to Managing outcomes producing in a more sustainable way, we are asking the farmer to pay Engaging with our stakeholders the price for climate change. Materiality However, agriculture is becoming increasingly integrated into the food 02 YEAR IN REVIEW value chain. Input providers are joining forces, farms are growing in scale and professionalism, the food industry is moving upstream, 03 FROM THE BOARDROOM conscious consumers are putting pressure on the food and agriculture industry to achieve new levels of sustainability, and the food companies 04 FINANCIAL STATEMENTS are increasingly vocal about their ambitions of climate-neutrality.
14 Yara Integrated Report 2020 Working with the world’s largest buyer nutrition, knowledge transfer and tech innova- of milk tion,” says Food Chain Specialist in Yara, A case in point is Yara’s pilot project in Colombia Estefania Chaves Chaves, who has worked 01 THIS IS YARA with global food company Nestlé. By collabo- closely with the trial farmers. rating from soil to supermarket, sustainability CEO message in dairy production is improved, farmer prof- Promising results 2020 Highlights itability increased, and consumer demands for “Although still early days, the results so far Company presentation sustainable dairy products met. have been very promising for all partners – the farmer, Nestlé and Yara,” Estefania continues. How we create value As the world’s largest buyer of milk, Nestlé has Partnering for people, planet led the effort to improve sustainability in the By increasing grass yields and quality, the cows and prosperity dairy supply chain for a long time, and this pilot became healthier and milk quantities and Megatrends project with Yara is one of many projects to farmer profitability increased. Our strategy foster agripreneurship and reduce the environ- Strategic goals mental impact of dairy farming. “Before, I was giving vitamins and concentrates Strategic risks to the cows, but I was neglecting the soil. When Clean Ammonia opportunities For the project, four farms in the regions César I fertilize the soil correctly, my cows don’t and Caquetá in Colombia were selected. The need extra vitamins. It also led to a decrease Managing outcomes farms “Génesis” and “Panorama” produced in diseases, and thus in use of medicines,” says Engaging with our stakeholders milk with intensive grazing and the farms “El one of the pilot farmers, Carlos Rodríguez Materiality Rosario” and “Nido de Amor” produced milk Padilla, at El Rosario farm. with traditional grazing. 02 YEAR IN REVIEW Pilot farmer Saul-Alexánder Trujillo of the The farmers have valuable local expertise and Genesis farm agrees on the importance of 03 FROM THE BOARDROOM knowledge of the challenges facing tropical healthy soil and grass. “Strong forage crops dairy production. Yara’s agronomists supported have helped our cows reach their full genetic 04 FINANCIAL STATEMENTS them with premium crop nutrition products, potential”, Trujillo says. “We started with one trial agronomic knowledge, and digital tools for plot, but after seeing the results, precision farming. “Fertilizing optimally has contributed to we chose to expand this practice multiplying our dairy production. We started to all plots” “The purpose of the project is to demonstrate with one trial plot, but after seeing the results, the improved sustainability, productivity and we chose to expand this practice to all plots,” Saul-Alexánder Trujillo – Genesis farm profitability that is possible with an integrated Trujillo says.
15 solution that includes best practice crop Yara Integrated Report 2020 “Through our combined technical expertise, “The Colombia pilot underlines the value of and by working with farmers for farmers, this collaboration in the interest of farmers, the partnership has proven that there are solutions consumers, society and ultimately the planet. 01 THIS IS YARA that enable the sustainable intensification of We strongly believe in the need to leverage milk production in a tropical environment,” partnerships to solve supply chain challenges CEO message says Pascal Chapot, Group Head of Sustainable in the food industry,” says Robert M. Erhard, 2020 Highlights Agriculture Development at Nestlé. Sustainable Agriculture Development – Global Company presentation Lead Dairy at Nestlé. Sustainable profits How we create value Even more impressive are the environmental “The goal in 2021 is to spread the message Partnering for people, planet results. After 9 months, the two intensive about these best practices and their successes to and prosperity Estefania Chaves Chaves grazing farms reduced the CO emissions per all Nestlé farmers in the region, and ultimately, Yara Food Chain Specialist Megatrends 2 litre milk by 21%. The traditional to lay the foundations of sustainable dairy Our strategy grazing farms reduced their CO2 emissions per production in all of Colombia,” concludes Strategic goals litre milk by 5%. Estefania Chaves Chaves. Strategic risks 21% Clean Ammonia opportunities By growing the production using sustainable Managing outcomes solutions, farmer income increases, while the CO emission pr liter environmental impact of food production is 2 Engaging with our stakeholders After 9 months of reduced, and consumer demands are met. Yara intensive grazing Materiality can play an important role in an increasingly integrated food value chain, providing sustain- 02 YEAR IN REVIEW able solutions to create value for the farmers, food companies and the planet. 03 FROM THE BOARDROOM “Nestlé and Yara share the ambition of making 04 FINANCIAL STATEMENTS farming more sustainable environmentally, socially and economically. It starts with the field and the farmer: Together we can create a more sustainable food system, and it is natural that we join forces in the field to support farm- ers to make the change towards new, sustain- able practices,” says Chrystel Monthean, EVP
16 Yara Americas. Yara Integrated Report 2020 MEGATRENDS Agriculture, the food value chain and industries are undergoing profound changes. These are the megatrends The world is changing fast significantly shaping our industry and markets. 01 THIS IS YARA » See how the megatrends are disrupting business as usual CEO message 2020 Highlights Company presentation How we create value Food industry Partnering for people, planet Climate change Water stress Soil degradation integration and prosperity Megatrends Changing climatic patterns are set Water is crucial for plant growth. There Roughly one third of the world’s soil is Our strategy to impact agricultural production is no substitute. Agriculture is a huge degraded, and soil erosion, biodiversity Agriculture and the food value chain is Strategic goals throughout the world, mainly impeding consumer of water, and lack thereof is a loss and pollution are high on the list becoming increasingly integrated. Input Strategic risks plant growth. Across most sectors, there major stress factor in crop production. of causes. Farming without adequate providers are joining forces, farms are Clean Ammonia opportunities are increasing pressure and expectations Climate change disrupts precipitation replenishment of nutrients adds to growing in scale and professionalism, for climate actions and reduction of patterns, while extensive irrigation the problem. Best farming practices, the food industry is moving upstream, Managing outcomes greenhouse gas emissions. taps aquifers and reduces water quality however, focus on soil health, carbon and the whole industry is under pressure Engaging with our stakeholders through salination. capture and regenerative agriculture. to achieve new levels of sustainability. Materiality
02 YEAR IN REVIEW
03 FROM THE BOARDROOM Dietary shifts Circular economy Digitalization 04 FINANCIAL STATEMENTS >20%
of global greenhouse gas emission Conscious consumers, particularly in Resource scarcity, growing sustainability Digital innovation and technological stem from agriculture, forestry high income countries, are increasingly awareness and increased consumer transformation are fundamentally and land use change driving diets towards healthier and pressure is creating a push towards a changing strategies and practices in sustainable choices, and more plant- circular economy. It creates a push for decision making, fertilizer application, based nutrition. Globally, however, recycling of nutrients in agriculture and farm automation and traceability. It the trend towards higher calorie and food value chains, as well as for organic has started to impact the entire food
17 animal protein intakes continues. fertilizers. value chain. Yara Integrated Report 2020 MEGATRENDS What the changes mean to us 01 THIS IS YARA Megatrends and industry developments are disrupting business as usual. CEO message 2020 Highlights Company presentation How we create value Partnering for people, planet and prosperity 1 2 3 Megatrends Our strategy Climate emergency and political response Decarbonizing food from field to fork The 4th agricultural revolution is digital Strategic goals A wave of new regulatory and political initiatives Consumer demand is driving food companies to The next agricultural revolution has started, enabled Strategic risks addressing climate change is reaching shore. The ‘EU concrete actions. The traceability of food products, by digital tools, big data and artificial intelligence to Clean Ammonia opportunities Green Deal’ positions Europe as a front-runner in their origin and environmental and carbon footprint, support farming best practices. Digital tools currently the global food and industry transformation. It aims are key issues for consumers. The food value chain have a relatively small impact on the profitability of Managing outcomes to reduce nutrient losses by half and expand organic needs to provide healthier and more sustainable food. farms, but our studies have identified the potential for Engaging with our stakeholders farming to include a quarter of all farmland. Leading food companies have moved the decarbonizing 3-7% yield increase and up to 14% nitrogen fertilizer Materiality of food to the top of the agenda. We can help them meet savings. expectations by providing sustainable food solutions. 02 YEAR IN REVIEW
03 FROM THE BOARDROOM 4 5
04 FINANCIAL STATEMENTS Commoditization and slower demand Alternatives to natural gas are approaching China’s ‘Zero Growth’ strategy aims to stop further We expect natural gas to remain our main feedstock growth of nitrogen consumption after 2020. We expect in the coming years. Nevertheless, decarbonized demand growth in Latin America, Brazil, and Africa, alternatives will likely challenge fossil fuel over time. but capacity additions have created an over-supply. Players are looking into alternative energy carriers Overall, we expect the global demand growth in the to decarbonize hard-to-abate sectors. In the shipping next 10 years to slow down. industry, green hydrogen and ammonia is regarded as » Learn about our strategic responses 18 the most promising zero-emissions fuel. Yara Integrated Report 2020 Our strategy
01 THIS IS YARA We entered this decade with an updated strategy and the overarching Over the past two decades, Yara’s business model has CEO message goal of becoming a leading partner for farmers and food companies. developed from focusing on our asset and product base 2020 Highlights – what we have - to focusing on farmers and complete Company presentation solutions – how we can contribute. How we create value Yara is broadening its business model This development is reflected and emphasized in our Partnering for people, planet latest strategy update, which we conducted in 2020. and prosperity Essentially, our ambition is to be a leading partner to Megatrends farmers and food companies by providing sustainable Our strategy solutions to help them thrive and meet their goals Strategic goals and commitments. We will continue to improve our Strategic risks fertilizer production and competitive edge – what we Our Clean Ammonia opportunities have – but we are increasingly aiming to expand this competitive edges core - tapping into the opportunities emerging in our Managing outcomes Broadening Enabling the our core business environment – how we can contribute. Engaging with our stakeholders hydrogen towards food People economy Materiality solutions Knowledge Strategic priorities Connection to Farm The outcome of the 2020 update was also a more 02 YEAR IN REVIEW Global footprint streamlined strategy as we distilled our previous three strategic priorities down to two pillars. 03 FROM THE BOARDROOM These two strategic pillars represent equally sized val- 04 FINANCIAL STATEMENTS ue creation potential and form the foundation for our strategic responses:
Driving sustainable performance » 1. Accelerate operational excellence » 2. Expand our commercial reach and offerings Diverse and Active portfolio Clear capital inclusive culture management allocation
19 Yara Integrated Report 2020 Operational excellence is paramount to unlock Efficient operations the potential of our strategy. It ensures a robust Efficient operations form the very backbone of financial position as we expand our reach and our business. Our work in this field is centered 01 THIS IS YARA offering and develop new business models. Our around the Yara Improvement Program 2.0. A approach to operational excellence is multidi- number of initiatives have been rolled out since CEO message STRATEGIC PRIORITITES mensional and covers our culture and people 2015, and while the overall effect on volumes 2020 Highlights as well as the efficiency and footprint of our and energy efficiency have yet to reach its full Company presentation Accelerate operations. potential, we are seeing value creation from several of these initiatives, not least the digital How we create value Culture and people production program and from production op- Partnering for people, planet operational Our strategy will lead us into new territory. timization. Going forward, the largest contri- and prosperity To succeed with new customers, new business butions are expected to come from improved Megatrends excellence models, new partners, and new solutions, we reliability and plant steering. Our strategy will invest in a culture of entrepreneurship and Strategic goals continuous improvement. Employee engage- Holistic performance management Strategic risks ment, leadership, cultural evolvement, diversity We will manage and measure our value Clean Ammonia opportunities and inclusion, and dynamic upskilling are all creation along the three axes People, Planet We are embarking on a significant topics of high priority. Our responsible busi- and Prosperity, taking a holistic approach to Managing outcomes change journey, requiring shifts in ness conduct remains integral, safeguarding our performance management to integrate Engaging with our stakeholders mindset and behavior as well as health, safety, ethics, and the environment. sustainability. As an early mover in mitigating Materiality efficiency.
02 YEAR IN REVIEW USD 500 million in 03 FROM THE BOARDROOM improvements have been realized
04 FINANCIAL STATEMENTS since the launch of the first Yara Improvement Program in 2015.
20 Yara Integrated Report 2020 “Our ambition is to become climate neutral by 2050, and we have initiated several projects that will reduce the 01 THIS IS YARA emissions by another 10-15% from today’s level.” CEO message Our 2020 Highlights priorities Company presentation 2021 GHG emissions, we are well positioned to meet the EU How we create value Commission target of 55% reduction by 2030 compared Improve the Partnering for people, planet to 1990 levels. Our ambition is to become climate neutral reliability of and prosperity by 2050, and we have initiated several projects that will our production Megatrends reduce the emissions by another 10-15% from today’s plants Our strategy level. With the required public co-funding and regulatory Develop change Strategic goals framework in place, we have an ambition to reduce our Strategic risks scope 1 & 2 emissions by 30% in 2030. A pathway for management activities to Clean Ammonia opportunities scope 3 emissions will be defined through the process of establishing a Sectoral Decarbonization Approach for our support Managing outcomes industry. cultural Engaging with our stakeholders change Materiality We have also adapted our governance structure to drive holistic thinking and will move forward with a strategic 02 YEAR IN REVIEW review of our asset base and stricter prioritization of activities. 03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
21 Yara Integrated Report 2020 3. New geographies or segments To reach our ambitions, we will build on our core as a leading food solutions company to We will target new geographies and segments expand our reach and offering. Developing new to leverage new revenue models and services. 01 THIS IS YARA commercial offerings and business models will This will include stepping up in regions where be decisive to evolve our revenue base. we have a broader presence as well as entering STRATEGIC PRIORITITES CEO message new markets, such as organic farming, which is 2020 Highlights New commercial offerings particularly prominent in Europe. Company presentation Expand our Yara Farming Solutions and our regional units will explore four concrete avenues to expand 4. Channel transformation How we create value our reach and offerings: New digital platforms can shift sales to higher- Partnering for people, planet reach and margin channels and enable new digital integra- and prosperity 1. New revenue models tion with retailers. Farmer surveys conducted Megatrends offering Our combination of knowledge, digital tools during the Covid-19 pandemic suggest an Our strategy and crop nutrition enable us to pursue new increasing desire to buy inputs online. We will Strategic goals revenue models to unlock potential for higher explore both direct-to-farm online business Strategic risks margins and decouple our products from glob- platforms and direct-to-retailer online platforms. Clean Ammonia opportunities al commodity prices. New models can include We will continue to operate with outcome-based business models, new pricing New business opportunities Managing outcomes commercial excellence across models, such as subscriptions or charge per Yara’s founders were entrepreneurs who took Engaging with our stakeholders markets every day, while broadening hectare, or establishing low-carbon, organic great risk when faced with a significant business Materiality our core and enabling a hydrogen and organo-mineral offerings which we do not opportunity. In their spirit we want to explore economy. have today. two business opportunities with fundamentally 02 YEAR IN REVIEW different value drivers. 2. Selling services 03 FROM THE BOARDROOM We will commercialize and monetize Yara’s knowledge through digitally enabled services, 04 FINANCIAL STATEMENTS primarily subscription based. Our goal is to gain access to recurring revenue streams that We have an ambition to have yet to be captured. Sustainability services along with digital agronomy services and farm- generate an incremental USD to-fork connectivity services are among the 300–600 million EBITDA from services that can be commercialized this way. new business models by 2025.
22 Yara Integrated Report 2020 1. Clean carbon marketplace Focused growth Our portfolio, global footprint and We need scale to lead the development knowledge about climate-smart farming of more sustainable food production, 01 THIS IS YARA represent a great starting point to set up to be a relevant commercial partner, a carbon business. By reducing emissions and to be a discussion partner for key CEO message and sequestering carbon at farms, we stakeholders. Successful implementation 2020 Highlights can create new revenue streams from of our strategy also requires growth. To Company presentation carbon credits– an opportunity that this end, our growth agenda sets three will also reward farmers for climate- priorities. Firstly, we will seek growth How we create value smart practices. We launched a carbon to strengthen our Farming Solutions Partnering for people, planet venture team to run a pilot in 2020 and offering, such as in digital technology and prosperity aim to generate the first credits in 2021, and reach, and in recycled and organic Our Megatrends with a rapid scaling perspective. nutrients. Secondly, we will consider priorities 2021 Our strategy value-adding assets, such as NPK and Evolve our commercial Strategic goals 2. Clean ammonia high-value products. And finally, we offering through the Farming Strategic risks The drive for a clean hydrogen and will seek scale in markets of strategic Solutions strategy Clean Ammonia opportunities ammonia-based economy has quickly importance. gained momentum. Clean ammonia is Managing outcomes Launch a carbon marketplace regarded as the most promising zero- Disruptive innovation in Engaging with our stakeholders emissions alternative to fossil fuels by adjacent sectors Establish a green Materiality the shipping industry, which is likely We believe that the strategic value of ammonia business to be the first sector to use ammonia at doing venture investments is high. If 02 YEAR IN REVIEW scale. We are well positioned to become done right, they can create measurable the credible clean ammonia champion by value for Yara and our shareholders. 03 FROM THE BOARDROOM leveraging our strengths in production, We will direct venture investments into logistics and trading. By running initial clearly defined themes such as climate 04 FINANCIAL STATEMENTS green ammonia production pilots in smart crop solutions, decarbonization Pilbara (Australia), Sluiskil (the Nether- of fertilizer production, farm connectivity lands) and Porsgrunn (Norway) we will and new revenue models in agriculture. build knowledge and support market development.
23 Yara Integrated Report 2020 Strategic goals
01 THIS IS YARA People Planet Prosperity CEO message 2020 Highlights Company presentation How we create value Partnering for people, planet and prosperity Megatrends Our strategy YARA KPI 2025 Target Measure YARA KPI 2025 Target Measure YARA KPI 2025 Target Measure Strategic goals 1) Energy efficiency 32.7 1) 2) GJ/t NH Ammonia production 8.9 Mt Strategic risks Strive towards zero accidents <1.0 TRI 3 Clean Ammonia opportunities Finished fertilizer production 1) 23.9 Mt GHG emissions, intensity 2.7 t CO e /t N Engagement index Top quartile Index 2 Managing outcomes Premium generated 2) TBD GHG emissions, scope 1+2 -30 2) % CO e Engaging with our stakeholders Diversity and inclusion index Top quartile Index 2 Revenues from new 1.5 BUSD Materiality business models 2) Hectares under Female senior managers >35% % 150 MHa management Revenues from online sales 2) 1.2 BUSD 02 YEAR IN REVIEW Carbon marketplace TBD Working capital 92 Days 03 FROM THE BOARDROOM Capital return (ROIC) >10 %
04 FINANCIAL STATEMENTS Fixed costs 1) 2,314 MUSD
Capex 1200 MUSD
Net debt / EBITDA 1.5 – 2.0 Ratio
MSCI rating A Score
Sustainalytics rating Med Score
1) YIP target for 2023. 24 1) Energy efficiency target is for 2023. 2) GHG absolute emissions scope 1+2 target is for 2030 from a 2019 baseline. 2) Documentation for the KPIs that were launched at the ESG seminar in December 2020 is ongoing. Yara Integrated Report 2020 Strategic risks
01 THIS IS YARA Risk appetite to be exposed to uncertainty around tiveness. In regions with efficient gas Risk factors CEO message Risk appetite is broadly defined as the future revenue generation, but the an- markets, we will seek exposure to spot Yara’s business is closely interlinked 2020 Highlights level of risk an entity deems acceptable nual resources employed are considered market prices unless exceptional market with the major global challenges of Company presentation in the pursuit of overall goals. Deter- moderate and reviewed on an annual circumstances clearly give reason for resource scarcity, food insecurity and mined by the Board, these risk appetite basis. deviation. In regions without efficient global warming. Execution of our strat- How we create value statements set boundaries for strategic gas markets, Yara seeks to enter into egy for sustainable, profitable growth Partnering for people, planet initiatives, guide resource allocation Cost curve position in longer term contracts if favorable gas depends on our ability to manage stra- and prosperity and aid decision-making within the production portfolio prices are obtainable. tegically important risk and opportuni- Megatrends company. Yara seeks investments in new produc- ties relevant to our industry and arising Our strategy tion capacity which strengthens Yara’s Information and cyber security exposure from our business environment. Strategic goals Exposure to global nitrogen position on the cost curve compared to Yara has a low appetite for risk expo- Strategic risks price dynamics peers, and that have a good strategic sure to cyber incidents in the office and Clean Ammonia opportunities We optimize our business model by fit (value-added assets and assets the production environment. Yara seeks seeking exposure to fertilizer market enable to expand our offering). Invest- high level of protection to mitigate Managing outcomes prices for own produced products. ments in current production portfolio exposure to safety, environmental and Engaging with our stakeholders are prioritized based on cost competi- reliability issues in our production sites, Materiality Exposure to new business areas tiveness and strategic fit of the assets. in addition to leakage of confidential outside current core operation data, legal and regulatory compliance 02 YEAR IN REVIEW Yara invest funds in a defined set of Exposure to natural gas price markets violations, insider threat from dismissed new business areas to mitigate risk in Securing access to, and stable supply of, employees or contractors and loss or 03 FROM THE BOARDROOM core business and to develop new rev- favorably priced natural gas is imper- malicious modification of business-crit- enue streams. The company is willing ative to our operations and competi- ical data. 04 FINANCIAL STATEMENTS
25 Yara Integrated Report 2020 Strategic risks Factor Mitigation
Market dynamics – Nitrogen commodity A large part of our business consists of sales of fertilizer products used Yara’s business model, with a mix of Own Produced Products and Third-Party fertilizer prices in agriculture. While a growing world population, economic growth Products marketed by our global commercial organization, offers flexibility to adjust 01 THIS IS YARA and changing dietary patterns are driving overall demand for food and to supply and demand fluctuations. We increasingly focus on expanding sales of fertilizer, fluctuations in agricultural prices along with changes in global differentiated products where pricing and demand is less volatile. Yara invests in CEO message and regional fertilizer production capacity could significantly impact our developing farmer centric solutions that integrate knowledge, digital tools and 2020 Highlights profitability services with our product portfolio to further differentiate our offering to the farmer. Yara also conducts global optimization with risk reduction in mind, e.g. prioritizing a Company presentation global presence, counter-seasonality and market flexibility in addition to short-term How we create value profitability. Third Party Products exposure limits have been established and are closely monitored for the most Third-Party Products intensive countries. Partnering for people, planet and prosperity Market dynamics – natural gas prices Due to natural gas being a key raw material in the production of nitrogen- Yara’s risk exposure towards energy sourcing is minimized through global purchasing Megatrends based chemicals and fertilizer products, the pricing and availability of activities, based on our energy strategy. Executing this strategy, we are continuously natural gas across regions is a strategic factor for Yara. Securing access monitoring options for additional and alternative sources of favorably priced natural Our strategy to and stable supplies of favorably priced natural gas is imperative to our gas in existing and new areas of production. All our European gas contracts are hub- Strategic goals operations and competitiveness. based contracts, and we are well positioned to cover the risk of spot exposure. In some of our plants we have the operational flexibility to reduce gas purchases and import Strategic risks ammonia for fertilizer production if gas prices peak, and we benefit from a natural Clean Ammonia opportunities hedge in the correlation between nitrogen fertilizer prices and global energy prices. Managing outcomes Raw materials availability Yara is sourcing a wide range of raw materials for fertilizer production With respect to raw materials, as one of the world’s largest buyer of phosphate and Engaging with our stakeholders from third parties, e.g. phosphate and potash (P&K). Terminations, potash, we benefit from scale advantages in sourcing. To mitigate the risk of failure in Materiality material change, political/sanction risk or failure of delivery in these sourcing of these key raw materials, Yara aims for long-term relationships with a wide arrangements can have a negative impact on Yara’s operations. network of suppliers, continuously aiming to optimize the company’s raw material balance. Yara currently evaluates several options for increasing the company’s degree 02 YEAR IN REVIEW of self-sufficiency.
03 FROM THE BOARDROOM Investments and integration Yara has an ambition to grow profitably, through broadening our core Yara has a well-defined capital value process that ensure projects are properly business model and enabling a hydrogen economy, while driving a evaluated, verified and sufficiently mature at specific decision gates. 04 FINANCIAL STATEMENTS sustainable performance. The profitability of future strategic initiatives A comprehensive, annual strategy update process secure a review of ongoing relies on long-term price assumptions and future operational and financial initiatives and potential gaps in delivering on our long term strategy. This includes performance. Investments in new business areas and integration of new updates of key information such as energy and global pricing, as well as strategic companies poses a risk of not being able to capture operational and assessments of specific opportunities or concerns. The integration of new businesses financial benefits and synergies. is managed and monitored based on accumulated learning from several large business integrations completed during recent years. Yara maintains a conservative investment approach, through strong focus on capital discipline.
26 Yara Integrated Report 2020 Strategic risks Factor Mitigation
Political risks Our investments and operations may be affected as a result of changes in Yara has established an effective system involving key expert functions globally political leadership, policies and regulations as well as political and social for monitoring and reporting of political related risks. Yara utilizes, in addition to 01 THIS IS YARA instability in a country or a region. Such changes could represent threats internal resources, external sources for monitoring and reporting of matters that as well as opportunities for Yara. may impact the company. Further, Yara’s Integrity Due Dilligence (IDD) screens all CEO message business partners, and on a risk-basis business partners are selected for additional 2020 Highlights due diligence. Business partner and transactions are continuously monitoring through screening against sanctions and compliance databases. Company presentation
How we create value Information and Cyber Security New and increasingly sophisticated computer viruses and new digital In the process of addressing risks of cyber-incidents, Yara is actively focusing on to Partnering for people, planet crime models combined with the significantly increased internet exposure ensuring proactive monitoring of threats, vulnerabilities and effectiveness of security and prosperity of our computerized industrial control systems may result in safety and controls for high value assets throughout the company and raising awareness of cyber reliability risks at any of our production and product handling sites. risks and threats for our employees globally. Megatrends Leakage of confidential data, legal and regulatory compliance violations Our strategy loss or malicious modification of business-critical data can negatively Strategic goals impact any and all of our business processes. Strategic risks Clean Ammonia opportunities Managing outcomes Engaging with our stakeholders Materiality
02 YEAR IN REVIEW
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
27 Yara Integrated Report 2020 CASE Clean Ammonia 01 THIS IS YARA opportunities CEO message 2020 Highlights Yara is uniquely positioned to enable the hydrogen economy. Company presentation We are the largest global trader of ammonia – which can How we create value efficiently transport hydrogen as energy to markets. Partnering for people, planet and prosperity Megatrends Our strategy Hydrogen is strongly positioned as a key solution for decarbonizing Strategic goals the energy systems of the future. But hydrogen is challenging to store Strategic risks and transport. This is where ammonia comes in as the easiest way of Clean Ammonia opportunities transporting and storing hydrogen. Managing outcomes “I am pleased that we have announced the next steps to enable the hy- Engaging with our stakeholders drogen economy, establishing a new global unit – Yara Clean Ammonia Materiality – to capture growth opportunities within carbon-free food solutions, shipping fuel and other clean ammonia applications, leveraging Yara’s 02 YEAR IN REVIEW unique existing positions within ammonia production, trade and The most promising clean energy PROPERTIES shipping,” said the CEO and President Svein Tore Holsether. 03 FROM THE BOARDROOM shipping fuel Yara is a leading global ammonia producer, and we operate a global 04 FINANCIAL STATEMENTS • IMO has set a target to halve GHG platform for trade and storage with a market share above 20%. Yara emissions by 2050 and reduce carbon can enable clean energy utilization based on hydrogen through its Liquid H2 ammonia trading, distribution and storage. intensity of international shipping by Temperature - 253° 40% by 2030 Energy density 2.00 Yara has teamed up with several clean energy companies to enable • Shipping majors, class society and production of green ammonia. This will lead to production of carbon consultants are pointing towards Liquid NH3 free fertilizers. In addition, it will serve as clean fuel for the shipping Temperature - 33° 28 ammonia as the most promising industry and enable decarbonization of other energy intensive industries. Energy density 3.75 clean fuel candidate Yara Integrated Report 2020 Sustainability is embedded in our strategic priorities and actions. Simply put, our Managing outcomes approach is to minimize any negative impacts from our activities while maximizing our contribution to feeding the world responsibly. While improvements are always 01 THIS IS YARA and value creation ongoing, we believe that the bottom line is a solid net positive
CEO message 2020 Highlights Company presentation How we create value Sourcing Production Transportation Partnering for people, planet and prosperity Megatrends Our strategy We use natural gas, electricity Fertilizer production is energy- Transportation of fertilizer causes and minerals to make our intensive and causes emissions emissions to air and water, and Strategic goals fertilizers. The majority of our to air and water. The water we involves risks of incidents Strategic risks raw materials comes from withdraw is mostly returned and spills. Clean Ammonia opportunities non-renewable sources. unpolluted. Managing outcomes • 2.6 mill tonnes CO2e Impacts Engaging with our stakeholders • 239,061,933 MMBtu natural gas/ • 16.6 m tonnes CO2e hydrocarbons • 8,300 tonnes NO Materiality x • 2.0 mill tonnes phosphate • 913 mill tonnes water withdrawal
02 YEAR IN REVIEW
• Circular economy • Energy and catalyst optimization • Product stewardship 03 FROM THE BOARDROOM • Decarbonize • Decarbonization program • Ammonia as energy carrier • Resource optimization • Water analysis ongoing • Zero-emission shipping vessel 04 FINANCIAL STATEMENTS (Yara Birkeland) Response
• Yara Nature brand launched • About 17,000 jobs created • Reliable deliveries of crop based on circular nutrients • Raising industry standards for nutrition, supporting farmers • Three green ammonia pilots energy efficiency worldwide and one full-scale project
Value creationValue • Industrial symbiosis initiatives 29 Yara Integrated Report 2020
01 THIS IS YARA
CEO message 2020 Highlights Company presentation How we create value Fertilizer application Natural environment Food consumption Partnering for people, planet and prosperity Megatrends Our strategy Nutrient losses from denitrifi- Agriculture uses 70% of Dietary changes drive food cation, volatilization or leaching, mankind’s fresh water demand, while about 1/3 of Strategic goals can cause GHG emissions and withdrawals, uses 1/3 of the the food is lost or wasted. Strategic risks eutrophication of waterways. land and is the main driver Clean Ammonia opportunities of deforestation. Nutrient Managing outcomes • 42.3 million tonnes CO2e Impacts imbalance is a driver Engaging with our stakeholders for soil degradation. Materiality
02 YEAR IN REVIEW
• Precision farming tools • Balanced crop nutrition • Micronutrients supporting health 03 FROM THE BOARDROOM • R&D on field emissions • Soil testing and analytical services • R&D for improved crop quality • Yara Water Solution 04 FINANCIAL STATEMENTS • Nitrate strategy Response
• Yara’s sensor tools and crop • Reduced deforestation from • 262 million people fed by the nutrition solutions improve farm agricultural intensification, spar- use of our crop nutrition performance ing GHG emissions of roughly solutions
590 billion tonnes CO2e Value creationValue 30 Yara Integrated Report 2020 Engaging with our key
01 THIS IS YARA stakeholders
CEO message 2020 Highlights Company presentation How we create value Partnering for people, planet and prosperity Megatrends Our strategy Strategic goals Strategic risks Clean Ammonia opportunities We engage with a wide range of stakeholders both globally Managing outcomes and locally. Engaging and keeping good relations with Engaging with our stakeholders stakeholders is integral in our transformation to become Materiality the Crop Nutrition Company for the Future.
02 YEAR IN REVIEW Agriculture is often perceived as a major contributor to several of the 03 FROM THE BOARDROOM biggest global challenges of our time. Our view is that agriculture also holds the solutions to many of them, and our strategy is designed to 04 FINANCIAL STATEMENTS enable such solutions.
We engage extensively in institutional stakeholder processes related to sustainable food solutions at the global level. Locally, we focus on understanding and responding to farmers’ needs and managing com- munity impacts. By gathering insights locally, we enable development of better products and practices.
31 Yara Integrated Report 2020 Engaging with our stakeholders
01 THIS IS YARA
CEO message 2020 Highlights The food industry is Company presentation We nurture a culture of under pressure to provide Companies cannot drive With agronomist on the openness and accessibility healthier and more industry change alone. Civil society helps set How we create value ground worldwide, we to senior management, sustainable food. As members of industry sustainability and people’s Partnering for people, planet have a deep understand- engaging employees in We see ourselves as a associations we are able needs on the agenda. and prosperity ing of farmers’ needs and corporate matters through perfect partner in the to share best practices Together, we can mutually Megatrends capacity to meet them. several channels transformation. and speak with one voice. enhance knowledge. Our strategy Farmers Employees Food industry Industry organizations Civil society Strategic goals Strategic risks Clean Ammonia opportunities Managing outcomes Institutionalized stakeholder Engaging with our stakeholders Operational stakeholder dialogue processes Materiality Understand and respond to farmer’s needs, Develop sustainable farming solutions that Food and manage community impacts Farmer respond to global challenges 02 YEAR IN REVIEW industry
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
Local communities Suppliers Investors Academia Governments
Trust and support from We stay in regular Our strategy targets Yara supports a science- Regulatory actions are local communities are key contact with a wide superior shareholder based approach to crucial to reach the SDGs to our license to operate. range of suppliers and return from sustainable sustainable agriculture. and the Paris agreement. expect them to live up to solutions. We engage with We engage to share our internationally recognized academia to learn, share knowledge.
32 best practices. – and thrive Yara Integrated Report 2020 ENGAGING WITH OUR STAKEHOLDERS Corporate stakeholder dialogue 01 THIS IS YARA
CEO message 2020 Highlights Company presentation Commitments and endorsements Yara is a Strategic Partner of the World Economic Yara is a partner of the African Green Revolution How we create value Yara is a UN Global Compact (UNGC) signatory and Forum (WEF) and in 2020, took part at the WEF’s Forum and supports its work on youth entrepreneur- Partnering for people, planet has endorsed the UNGC initiatives Caring for Climate, International Business Council, CEO Climate Leaders ship through Generation Africa. Yara is one of six and prosperity CEO Water Mandate and Call to Action: Anti-Cor- and at WEF’s Sustainable Development Impact Summit. partners committed to the Farm to Market Alliance, a Megatrends ruption as well as the Food and Agriculture Business global public-private consortium seeking to transform Our strategy Principles (FABs), which we initiated and helped Yara is a member of the International Fertilizer Asso- food value chains in emerging markets. Strategic goals develop. ciation (IFA) and Fertilizers Europe. Yara is also part Strategic risks of the European Industrial Gases Association (EIGA), Yara is a member of the Federation of Norwegian Clean Ammonia opportunities We also support the United Nations Guiding Principles European Chemical Industry Council (CEFIC) and the Industries which is part of the overall Confederation of on Business and Human Rights, the OECD Guidelines International Federation of Industrial Energy Consum- Norwegian Enterprise (NHO). Managing outcomes for Multinational Enterprises, the International Bill ers (IFIEC), where Yara currently holds the Presidency. Engaging with our stakeholders of Human Rights, and the core conventions of the Stakeholder procedure Materiality International Labor Organization (ILO). Yara is also Yara is a member of the Business for Nature Coalition, In 2020, Yara established a new stakeholder procedure a member of Transparency International. to reduce climate and environmental impacts. Yara is which mandates Yara Business Units to perform a 02 YEAR IN REVIEW also a member of the One Planet Business for Biodiver- stakeholder analysis, and to manage stakeholder Memberships and associations sity (OP2B), and a founding member of the Cool Farm relationships through the annual business cycle. Stake- 03 FROM THE BOARDROOM Yara is a member of the World Business Council Alliance which has published the online GHG farm holders’ perspectives shall also inform our business for Sustainable Development (WBCSD). Svein Tore calculator Cool Farm Tool. planning process. 04 FINANCIAL STATEMENTS Holsether, CEO and President of Yara, is a member of WBCSD’s Executive Committee, as well as the Chair Engaging on the emerging topic of circular economy, of WBCSD’s Food and Nature Board. In 2020, Yara Yara is a partner of the Ellen MacArthur Foundation seconded WBCSD’s work on the Covid-19 response Food Initiative (EMFFI). Ellen MacArthur Foundation and developing a Sectoral Decarbonization Approach also supports the Nutrient Upcycling Alliance (NUA), for the nitrogen fertilizer sector. launched by Yara and Veolia.
33 Yara Integrated Report 2020 ENGAGING WITH OUR STAKEHOLDERS Stakeholder engagement 01 THIS IS YARA in 2020 CEO message 2020 Highlights Company presentation EU policies including Green Deal How we create value In December 2019, the European Commission launched the EU Green Deal. We find Partnering for people, planet that Yara has undertaken the right investments and organizational changes to optimize and prosperity our contribution to this transformative agenda. On a particular note, we will contribute Megatrends to the upscaling of precision farming. Our strategy Strategic goals Yara is committed to the CAP reform in the EU with the specific aim of embedding Strategic risks Yara supported the eco-scheme for being in line with environmental aspects. Yara supported the eco-scheme for being in line with the Clean Ammonia opportunities the European Commission’s ambition of moving to European Commission’s ambition of moving to a “smarter, simpler, fairer and more sustainable” CAP. Managing outcomes a “smarter, simpler, fairer and more sustainable” Common Agricultural Policy. Engaging with our stakeholders Yara’s main approach is built on our balanced crop nutrition strategy, addressing Materiality productivity and environmental performance in tandem. Also, applying the right form of mineral fertilizers can reduce the ammonia emissions in Europe by more 02 YEAR IN REVIEW than 10%.
03 FROM THE BOARDROOM Yara also welcomes the initiatives in the CAP post 2020 to support and mainstream the use of Farming Sustainability Tools (FaST) and the development of Farm Advisory 04 FINANCIAL STATEMENTS Services (FAS).
Food systems transformation In 2020, Yara engaged in preparing the 2021 United Nations Food Systems Summit. We also participated in regional and global Food Systems Dialogues (FSDs) to discuss food systems policies and economics, science-based targets and pathways, the potential for innovation, and the inclusive approach required for a just transition.
34 Yara Integrated Report 2020 Yara recognizes the critical role of the next generation Regenerative agriculture and soil health in the transition, and in 2020 continued to promote Yara is committed to an ambitious and integrated youth entrepreneurship at Generation Africa’s GoGet- agenda to halt nature loss, which has tangible eco- 01 THIS IS YARA taz Agripreneur Prize awarded at the Africa Green nomic impacts. In 2020, we continued to work with Revolution Forum in September. partners such as OP2B to share knowledge on digital CEO message tools and crop nutrition solutions that improve soil 2020 Highlights Climate Engagement health, nutrient use efficiency and support farmers and Company presentation In 2020, Yara signed a letter of commitment to the food companies in their transition to regenerative agri- Science Based Targets initiative to develop company cultural practices. We have also taken an active role in How we create value GHG targets as well as help build a Sector Decarbon- the Business for Nature Coalition, reflecting nature’s Partnering for people, planet ization Approach for the nitrogen fertilizer industry critical role as the infrastructure supporting humanity. and prosperity in line with the Paris agreement. Megatrends Sustainability in the Nordics Our strategy We continued to participate in the WBCSD Scaling Yara is part of the Nordic CEOs for a Sustainable Future, Strategic goals In 2020, Yara signed a Positive Agriculture working group, which in 2020 a group of 14 companies working to incorporate the Strategic risks letter of commitment to expanded its scope to include among other things UN sustainable development goals in their respective Clean Ammonia opportunities the Science Based Targets biodiversity perspectives. We believe that better business strategies. The CEOs met virtually with the sustainability performance should be rewarded in the Norwegian and Islandic Prime Ministers in July 2020. Managing outcomes initiative to develop market. To this end, we participate and sponsor the Engaging with our stakeholders company GHG targets True Cost of Food work in WBCSD. Emphasizing Yara’s focus on reducing emissions, Yara Materiality was main sponsor at the ZERO Conference in Oslo, Yara’s CEO attended the CEO Climate Leaders group the primary event of the Norwegian climate NGO 02 YEAR IN REVIEW in Davos in January 2020, as well as virtual meetings ZERO, featuring digital farming tools that will im- through the year. The group agreed to take the lead on prove the sustainability of farming. 03 FROM THE BOARDROOM net zero commitments. The NHO (Confederation of Norwegian Enterprise) 04 FINANCIAL STATEMENTS We also participate in discussions on Natural Climate kicks off every year with their prominent Annual Con- Solutions through WBCSD and WEF. Thematically ference in January, gathering leading decision makers linked to regenerative growth, this links climate from politics, business and NGOs. Yara, together with finance to solutions making nature a carbon sink. IBM, presented the opportunities in digital farming. Through this workstream, Yara is also involved in the Yara is also heading the Forum for Development, ini- global update process of the GHG Protocol, preparing tiated by the Confederation of Norwegian Enterprise for how to incorporate such carbon sinks into reporting. (NHO), consisting of business leaders together with
35 the Ministries of Foreign Affairs and International Development. Yara Integrated Report 2020 Materiality
01 THIS IS YARA
CEO message 2020 Highlights Company presentation Yara conducted its first materiality assessment in How we create value 2015, a process involving key representatives from Partnering for people, planet our business segments, expert organization and and prosperity management. This process used the Sustainability Megatrends Accounting Standards Board’s (SASB) standards Our strategy for chemicals and mining industries as its starting point. Strategic goals Strategic risks Clean Ammonia opportunities The current update captures the strategy and risk updates of 2020. Managing outcomes Value creation is the starting point for presenting which topics we Engaging with our stakeholders regard as material for our ability to realize our strategy, short, medium Materiality and long-term. Materiality has been defined according to four main areas: megatrends, key value drivers, company capabilities and 02 YEAR IN REVIEW position, and license to operate.
03 FROM THE BOARDROOM Megatrends Megatrends constitute both risks and opportunities. They have been 04 FINANCIAL STATEMENTS prioritized according to their relevance to Yara’s business model, and also company ability to interact with such megatrends. The megatrends are described on p. 17, and are consistent with the 2019 report.
Three of the material megatrends are of a biophysical nature and are to some extent interlinked; climate change, soil degradation and water stress. Four megatrends are of a socioeconomic nature; food industry
36 integration, dietary shifts, circular economy and digitalization. Yara Integrated Report 2020 Key value drivers The key value drivers represent external topics with Key value Megatrends material influence on Yara’s value creation: drivers 01 THIS IS YARA Soil degradation COVID-19: The outbreak of the global pandemic has CEO message had significant socioeconomic impacts on societies Dietary Regulatory Food industry 2020 Highlights worldwide. shifts changes intergration Company presentation Nitrogen fertilizer prices: Changes in global and Circular How we create value Food prices regional fertilizer production and capacity impact Nitrogen economy Partnering for people, planet Climate change fertilizer prices and our profitability. fertilizer pricer and prosperity Megatrends Availability of Natural Natural gas prices: Hydrocarbons, mostly natural gas, raw materials gas prices Water Our strategy Digitalization are Yara’s main raw material and our main cost. Af- stress EXTERNAL TOPICS Strategic goals COVID-19 fordable access to natural gas is therefore a competitive wtth material impact on our Strategic risks advantage, and energy price fluctuations impact Yara’s value creation and offering Long term Short term Short term Long term Clean Ammonia opportunities costs. Managing outcomes Availability of raw materials: Our fertilizer production Knowledge Production INTERNAL TOPICS Ethics and Engaging with our stakeholders margin reliability with material impact on our compliance plants depend on consistent supplies of raw materials, position and performance Materiality most notably phosphate and potash. Connection Environmental 02 YEAR IN REVIEW Food prices: Increasing food prices can support higher to farm performance investments in agriculture and sustainable crop nutri- Infrastructure Health 03 FROM THE BOARDROOM and logistics and safety tion solutions. Global scale and presence 04 FINANCIAL STATEMENTS Regulatory changes: Political drive for climate-smart Product agriculture can strengthen demand for our crop nutri- Human capital The Yara stewardship tion solutions. Brand
Company capabilities and position Capabilities License These topics represent Yara’s internal topics which and position to operate significantly influences strategy choices, risks and
37 opportunities. Yara Integrated Report 2020 Knowledge margin: Yara’s deep understanding of crop Connection to Farmers: We sell to more than 20 Ethics and compliance: With operations in more than nutrition, farmers and industrial markets allows us to million farms and we have almost 15 million ha under 60 countries and sales to about 160 countries, Yara sell highly profitable premium products and solutions management through our digital platforms. This is exposed to different cultures, traditions, labor 01 THIS IS YARA that also benefit society. uniquely positions us to drive the development of the conditions and threats. We are dedicated to responsible food system in a way that works with, not against, the business conduct throughout our own operations and CEO message Production reliability: Increased plant reliability is a farmer. value chain. This means respecting recognized labor 2020 Highlights key driver of organic growth in our production system. and human rights and having safeguards in place for Company presentation License to operate combating corruption, and respecting laws and Global scale and presence: We operate across six Health and safety: We value our employees, and safety regulations. Responsible business conduct is crucial How we create value continents, in various commercial segments, and in is therefore a key priority at Yara. Our employees in earning the trust of our stakeholders and key to Partnering for people, planet 28 production sites. Our global distribution network represent a knowledgeable and diverse workforce, our success. and prosperity allows us to optimize product flows and plant inputs and every one of them has the right to a safe working Megatrends across geographies and adjust production volumes to environment. A safe and healthy workplace is good for Our strategy match market conditions. business. We believe that all accidents are preventable, Strategic goals and our goal is zero injuries. Strategic risks Infrastructure and logistics: Yara operates 200 in- Clean Ammonia opportunities frastructure points across the world, and has 10,800 Product stewardship: Ensuring that the right product Yara-branded retail outlets worldwide – providing an of the right quality arrives safely to the farmer is fun- Managing outcomes unmatched market reach. damental to building trust. Through our Product Stew- Engaging with our stakeholders ardship principles and a dedicated security function, Materiality Human capital: We have a passionate workforce. This Yara carries out extensive work to determine the best enables the company to take on new tasks, drive prof- and safest way to transport, store and apply fertilizers 02 YEAR IN REVIEW itability, optimize productivity, and propel innovative and industrial products. Our work on quality review thinking. In our markets, digital technology is making and the monitoring and handling of our products is the 03 FROM THE BOARDROOM rapid progress, a trend in which Yara actively engages foundation of industry standards. based on our knowledge and a diverse, talented work- 04 FINANCIAL STATEMENTS force. Environmental performance: Yara expects increased awareness of sustainable agricultural practices and an The Yara Brand: Our brand represents our values and increasing pressure on sustainability from governments the company personality. Embodying our knowledge, and regulators globally. Soil degradation, water stress, quality, vision, mission and values, the brand rep- biodiversity loss and nutrient pollution are issues resents the trust we earn from partners, customers and which will impact Yara’s operations and value chain. suppliers.
38 Yara Integrated Report 2020
01 THIS IS YARA YEAR IN REVIEW 02 YEAR IN REVIEW Responsible performance PEOPLE Women in Agronomy People performance People risks
PLANET In 2020, Yara committed to reporting in accordance with Making digital farming simple the Stakeholder Capitalism white paper, issued by the World Planet performance Economic Forum (WEF). With the Covid-19 pandemic as Planet risks backdrop, underlying economic and social inequalities and a mounting climate crisis, the white paper argues to mobilize PROSPERITY all to work together and seize this historic opportunity to Cracking the reliability code rebalance our world for the benefit of all. Prosperity performance Prosperity risks Yara has implemented a balanced scorecard against which we The Yara share measure company performance. Indicators have been adopted
in accordance with the Stakeholder Capitalism logic under the External framework guidance chapters, People, Planet and Prosperity.
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
39 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW People
PEOPLE Women in Agronomy Our people and their knowledge are our greatest People performance assets, and the result of our knowledge is clear: People risks Every day our agronomists deliver the best PLANET recommendations and solutions to our farmers, Making digital farming simple giving valuable technical advice on how to produce Planet performance efficiently and profitably in a sustainable way. Planet risks
PROSPERITY Cracking the reliability code Prosperity performance Prosperity risks The Yara share
External framework guidance
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
40 Yara Integrated Report 2020 CASE Women in 01 THIS IS YARA Agronomy 02 YEAR IN REVIEW WOMEN PEOPLE IN AGRONOMY PROGRAM After a survey uncovered challenges for female agronomists, Women in Agronomy the project “Women in Agronomy” was launched as part of Yara’s People performance Diversity & Inclusion agenda. The program connects emerging People risks female talents with more experienced female colleagues, with the goal of attracting, developing and retaining more women in agronomy. PLANET Making digital farming simple Planet performance At Yara, we believe that knowledge grows. When it comes to crops, Planet risks 60 we mean that quite literally. As such, our many agronomists on the ground are vital to Yara’s success. women across PROSPERITY all regions Uncovering the problem Cracking the reliability code A global survey among Yara agronomists uncovered a female rep- Prosperity performance resentation of only 14% out of 800+ employees. It also found that Prosperity risks female Yara agronomists frequently face challenges, both internally The Yara share and when meeting customers and distributors. Although regional dif- ferences exist, the results show that breaking traditional stereotypes in the field is a challenge for our female agronomists globally. External framework guidance
Yara is committed to gender equality as one important aspect of the 03 FROM THE BOARDROOM diversity and inclusion agenda and decided to take immediate action. The pilot version of the new “Women in Agronomy” program has 04 FINANCIAL STATEMENTS so far gathered 60 women across all regions. Through mentoring, networking and visibility channels, the program connects emerging female talents with more experienced female colleagues, building trust
41 and confidence. Yara Integrated Report 2020 Rejane Souza is Yara’s Vice President Crop Knowledge and Agronomy, and one of the initiators behind the program. “We are truly committed to building a more diverse workplace in Yara, regardless of whether 01 THIS IS YARA you work at our HQ, a production plant or in the field supporting farmers. The aim of the program is to help our people to grow as 02 YEAR IN REVIEW agronomists and develop future leaders. I’m very inspired by the participants’ engagement and I’m confident a good ‘harvest’ is to PEOPLE come, at the end of this first ‘season’,” Souza says. Women in Agronomy People performance Building on the lessons from the pilot, the goal is to expand the People risks network, reaching more female agronomists later this year.
A more diverse and inclusive workplace PLANET Agronomist Jamie Schechinger joined Yara in 2020. She participates Making digital farming simple in the pilot and has learnt the value of sharing experiences. “Every- Planet performance one comes from different backgrounds and has different experiences. Planet risks What unites us is that we all chose agronomy. This program has helped me see how the growth of one can benefit the whole group if we share our learnings and grow together. This program has high- PROSPERITY lighted not only how women can work together in a male-dominated Cracking the reliability code industry, but also how women and men can work together to create a Prosperity performance more inclusive work environment”. Prosperity risks The Yara share Diversity & inclusion is anchored in our business strategy. Besides our ambition to have 35% women in senior leadership positions by 2025, we aim for more diversity in Yara in all its forms and for having an “The aim of the program is to help our people to grow as External framework guidance inclusive work environment in which employees feel safe to be them- agronomists and develop future leaders. I’m very inspired selves. With the Women in Agronomy program, we are a small step 03 FROM THE BOARDROOM by the participants’ engagement and I’m confident a good closer to delivering on our strategy. ‘harvest’ is to come, at the end of this first ‘season’.” 04 FINANCIAL STATEMENTS
Rejane Souza VP Crop Knowledge and Agronomy
42 Diversity and inclusion index Engagement index Yara Integrated Report 2020 2025 target: Top quartile 2025 target: Top quartile
The Diversity and Inclusion index is measured Employee engagement is measured through through surveys done by an external third surveys done by an external third party, provid- party, providing a data-driven analysis against ing a data-driven analysis against international 01 THIS IS YARA international benchmarks. The threshold for benchmarks. The KPI was updated from previ- being in the top quartile was at 74% in 2020. ously being >80% to being in the top quartile. 02 YEAR IN REVIEW PEOPLE This threshold was at 76% in 2020.
PEOPLE 81 79 76 People 73 74 74 80 73 80 Women in Agronomy People performance performance 60 60 People risks 40 40
20 PLANET 20 NA NA NA NA NA Making digital farming simple 0 0 2016 2017 2018 2019 2020 2025 2016 2017 2018 2019 2020 2025 Planet performance Planet risks Most of Yara’s material topics involve Strive towards zero accidents Female senior managers a social dimension: caring for people 2025 target: ‹1.0 2025 target: >35% PROSPERITY safeguards and improves the Total recordable injuries (TRI) is the sum of Female senior managers is measured as % Cracking the reliability code loss time injuries (LTI), restricted work cases of the top positions defined in Yara’s position business. Prosperity performance (RWI) and medical treatment cases (MTC). level system. The 2020 KPI was 20%, while The TRI rate is calculated as the TRI per the previous 2025 KPI of 25% has been Prosperity risks million hours worked for employees and strengthened to 35%. The KPI is defined The Yara share contractors combined. We believe every based on our strong belief that diversity is a accident is preventable and work accordingly. key enabler to solving the difficult challenges
the world is facing. Successful implementation of our value External framework guidance 2.5 35 adding strategy depends on our knowledge 2.5 35
and access to human capital, measured as 30 03 FROM THE BOARDROOM 2.0 1.8 diversity and engagement scores. 25 1.4 1.4 17 20 20 04 FINANCIAL STATEMENTS 1.5 1.3 20 16 Safety is a top priority, and we set ourselves 1.0 15 15 a high goal from an already industry- 1.0 10 leading level, based on our belief that all 0.5 5 43 accidents are preventable. 0 0 2016 2017 2018 2019 2020 2025 2016 2017 2018 2019 2020 2025 Yara Integrated Report 2020 Performance indicators Unit of measure
Gender pay gap 2020 2019 2018 2017 2016 01 THIS IS YARA Yara analyzes gender pay levels correcting for factors such as responsibility in position, education and expe- Gender pay gap 4.0 4.9 5.5 1) n.a. n.a. % 02 YEAR IN REVIEW rience. Yara performed a follow-up gender equal pay gap study in 2020, expanding the number of countries PEOPLE Employee turnover rate 10.4 14.4 11.4 17.3 10.5 % included from six to 16, covering over 5,000 employ- Women in Agronomy ees. The range of this study is focused on non-tariff People performance contract employees, as the tariff schedules provide Sick leave rates 3.4 3.2 3.4 2.8 3.3 % People risks strong protection against bias due to gender. The gaps Environmental grievances from were reported ranging from 0% in Finland to 14% in local communities 140 135 165 165 252 Number Colombia. Yara has the ambition to close the gender PLANET Non-compliance with laws and equal pay gaps before 2025. A weighted average pay- regulations in the social and Making digital farming simple economic area 235,000 257,000 81,000 400,000 170,000 USD gap for the 16 countries included was 3.96%. The gap Planet performance on a like for like basis for the original six countries has Number of face-to-face risked People indicators Planet risks closed from 5.5% to 4.8% since 2018. based anti-corruption trainings 3,042 2,699 3,985 3,737 2,642 Headcount
Employees completion of Ethics Employee turnover PROSPERITY e-learning 93% 86% 83% n.a. n.a. % The rate is calculated as number of permanent staff Cracking the reliability code terminations in the period divided by the starting Reported fraud & corruption incidents 35 57 51 46 50 Number Prosperity performance permanent employee headcount. The global figure in- Prosperity risks corporates substantial variability, as each labor market Reported dis-crimination and The Yara share has different characteristics. For 2020, Yara regions harassment cases 49 76 119 109 22 Number had the following turnover rates: Brazil, 15%; rest of 1) 2018 figure was calculated in 2020 based on historic data. Latin America, 12%; Asia & Oceania, 9%; Europe, External framework guidance 8%; North America, 7%; Africa, 8%
03 FROM THE BOARDROOM Sick leave rate The rate is calculated as the percentage of Yara em- 04 FINANCIAL STATEMENTS ployees’ sick leave hours against the total number of working hours.
44 Yara Integrated Report 2020 Grievances from local communities reporting. The figures represent the raw number of in terms of human rights risk exposure. The 2020 risk Number of environmental grievance cases registered reported cases. Each case is investigated, and action is assessment identified 18 high risk countries, up from from neighbors of our infrastructure or production taken for all cases which are substantiated. Further de- 17 in 2019. The planned human rights impact assess- 01 THIS IS YARA facilities. tails on substantiated cases is reported in the separate ment on selected operations in Brazil was postponed to Sustainability report. 2021 due to COVID-19 restrictions. Findings from the 02 YEAR IN REVIEW Non-compliance human rights impact assessments conducted in India, The sum of registered fines in Yara for issues other Reported discrimination and harassment Colombia and Philippines in 2019 show that contract- PEOPLE than environmental breaches. incidents ed labor are at risk of negative human rights impacts, Women in Agronomy Yara encourages all to raise any concern if there is especially where manual labor is combined with heat People performance Number of face-to-face risked based suspicion of violations of regulatory requirements or exposure. Specific concerns relate to: People risks Ethics trainings Yara’s Code of Conduct. For People cases, the figure The Ethics and Compliance training program is deliv- provided represents the number of reported cases • Manual labor in hot working conditions ered by the dedicated regional compliance managers. involving discrimination or harassment. Each case is • Piece rate pay PLANET Training content is targeted at the participants based investigated, and action is taken for all cases which are • Living wage, working terms & conditions Making digital farming simple on a risk assessment considering factors such as substantiated. Further details on substantiated cases is • Freedom of association, grievance channels and Planet performance function, role, seniority and location. reported in the separate Sustainability report. right to remedy Planet risks Employees’ completion of Ethics e-learning Human rights management The mitigating actions is a line and local manage- The mandatory e-learning includes all topics covered Human rights are not easily expressed in numeric terms ment responsibility, while the Ethics and Compliance PROSPERITY by the Code of Conduct. All new hires with access to and is reported from a management perspective. A more department monitors implementation and reports on Cracking the reliability code a PC are expected to complete the e-learning within complete review is presented in the Sustainability report, progress. Prosperity performance 3 months. The purpose is to prevent corruption and available on the yara.com annual reporting section. Prosperity risks human rights abuses and to promote a culture in The Yara share which these matters are difficult to perpetrate. This is Yara’s Human Rights Policy set out in our Code of measured as the percentage of employees with access Conduct shows the priority areas and salient risks to the learning platform, who at year-end have com- identified. Yara’s Ethics and Compliance Department External framework guidance pleted the e-learning. In 2020, 93% of employees has organizational responsibility to provide a best in who had access to the learning platform completed class ethics and compliance program, playing a key 03 FROM THE BOARDROOM the e-learning. role in the management of risks related to human rights. The Board, Yara Management and the CEO are 04 FINANCIAL STATEMENTS Reported fraud & corruption incidents updated on a regular basis. Through whistleblowing and other channels, Yara is alerted to a number of cases where employees or others A global human rights risk assessment is updated
45 suspect fraud or corruption. Yara encourages such annually and ranks the countries where Yara operates Yara Integrated Report 2020 People risks
01 THIS IS YARA Risk appetite Health, safety and security exposure Leadership and organizational Risk factors 02 YEAR IN REVIEW Risk appetite is broadly defined as the Securing safe and healthy working con- competence exposure We put substantial resources and efforts level of risk an entity deems acceptable ditions is our highest priority. We aim We are developing a skilled organiza- into minimizing potential risk of loss PEOPLE in the pursuit of overall goals. Deter- to minimize the exposure to conditions tion with regards to leadership compe- from inadequate or failed internal Women in Agronomy mined by the Board, these risk appetite that could negatively affect health, tencies in key strategic areas necessary processes, people and systems, or from People performance statements set boundaries for strategic security and safety as low as practical to strengthen Yara’s competitiveness in external events. We do so through People risks initiatives, guide resource allocation possible. This includes to minimize the a changing business environment. To preventative controls and indicators. and aid decision-making within the probability and consequences of process deliver on Yara’s strategic goals and Our focus is on managing the causes company. safety and product safety accidents neg- objectives, upskilling and reskilling and mitigating their potential impacts PLANET atively affecting people, environment, employees are prioritized to meet com- through detective controls and actions. Making digital farming simple asset and the reputation of Yara. petencies needed for the future. Planet performance Planet risks
PROSPERITY People risks Factor Mitigation Cracking the reliability code Human capital Yara’s ability to compete effectively and meet market demands depends Yara recognizes that People are the enabler for success and Passionate People is Prosperity performance heavily on the competence, engagement, enablement and performance of identified as one of our four unique strengths. There is ongoing work to develop the Prosperity risks its employees. Qualified, diverse and motivated staff is essential for Yara’s People strategy as a response to Yara’s revised strategy. Yara regularly deploys global business to be successful. employee surveys to focus management initiatives on the employee engagement and The Yara share enablement and the Diversity & Inclusion agenda. For 2020, Covid-specific questions are included in addition to a focus on employee wellbeing. Yara is committed to promote equal opportunities and to fight discrimination. Diversity & Inclusion is fully External framework guidance integrated in Yara‘s business strategy and drives equality and diversity through an engaged workforce. Diversity and Inclusion is further anchored in key human resource processes such as recruitment, succession planning, performance management and 03 FROM THE BOARDROOM employee development.
04 FINANCIAL STATEMENTS
46 Yara Integrated Report 2020 People risks Factor Mitigation
Health and safety Yara’s production sites are large industrial plants, and many of Yara’s Yara has a strict requirement on reporting of incidents, accidents and injuries, and raw materials, intermediates and products are classified as substances works continuously to improve safety practices and safety culture by systematically 01 THIS IS YARA dangerous and hazardous to the health. Such a working environment enforcing strict operating procedures and developing employee and contractor contains various potential occupational health and safety risks to competence. Yara’s ambition is zero harm and the company continue to set 02 YEAR IN REVIEW employees and contractors working on site. While Yara’s raw materials are challenging KPI targets for occupational and process safety. Our Safe by Choice is often dangerous chemicals, most final fertilizers typically are not classified the umbrella for all HSE activities with the aim to reduce exposure to accidents, PEOPLE as hazardous, and the occupational health and safety risk at the use phase to develop strong HSE leadership, ensure safe workplaces and to drive operational is minor. discipline, and to train and encourage staff to always act and react in accordance with Women in Agronomy our safety standards. People performance People risks Personnel security risk Yara’s global activity may be exposed to threats from; criminals, activists, We continuously assess and manage regional and local threats to our personnel and local population, competitors, terrorists and States which could harm sites. HESQ Security department is in charge of developing and maintaining corporate
our operations and activity, and pose security risks to our personnel, the guidelines on security, and a method for assessing security risks, in addition to PLANET environment we work in, our assets and our reputation. initiating appropriate mitigation actions in response to potential threats. Making digital farming simple Planet performance Employee misconduct Failure to comply with the Code of Conduct and international standards We are committed to creating an equal opportunity workplace free from harassment, will have a damaging effect on our brand and reputation. It can also where hiring and development are based on achievements, qualifications, and skills Planet risks negatively affect our relationship with current and future business of each individual. Ethical and compliant business conduct and reporting are set at partners, resulting in both legal sanctions and financial loss. In positive high standards, reflecting Yara’s commitments. Yara has developed its Compliance terms, demonstrating a commitment to ethical business conduct and Program taking into account internationally recognized and endorsed standards in key PROSPERITY social responsibility can be leveraged to create competitive edge and areas such as people related risks. create value for business partners, employees and society at large. Cracking the reliability code Prosperity performance Human rights risk Yara’s operations may impact human rights throughout our entire value Yara’s human rights policy is set out in the Code of Conduct, and is integrated in the Prosperity risks chain. Through a mixture of ethical and legal obligations, risk of negative Compliance Program and key business processes, such as risk management and the The Yara share impact on human rights may affect Yara’s reputation and standing as a capital value process. responsible business.
Yara follows the United Nations Guiding Principles on Business and Human Rights External framework guidance and aim to continuously improve our work in this area. Our annual global human rights risk assessment allows us to proactively monitor exposure to human rights risks wherever we operate, and guides us in prioritizing locations for human rights impact 03 FROM THE BOARDROOM assessments.
04 FINANCIAL STATEMENTS
47 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW Planet
PEOPLE Women in Agronomy Global challenges are real and will not vanish on People performance their own. Climate change is affecting our way of People risks life. The world’s population continues to increase. We have more mouths to feed, limited land to PLANET farm and less resources to draw upon. Making digital farming simple Planet performance At Yara, we believe in meeting these challenges Planet risks head on. There is no trade-off between building a
profitable business and solving global challenges. PROSPERITY Environmental performance is a vital part of our Cracking the reliability code license to operate. Prosperity performance Prosperity risks The Yara share
External framework guidance
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
48 Yara Integrated Report 2020 CASE Making digital farming simple 01 THIS IS YARA
02 YEAR IN REVIEW Yara’s digital capabilities and innovations will be key to achieve our mission of responsibly feeding the world and protecting the planet. Based on input and PEOPLE insight from farmers, Yara’s Atfarm will become the gold standard for sustainable Women in Agronomy nutrient management. People performance People risks Atfarm is a digital tool developed by Yara to updates have been made to the tool, responding help farmers around the world effectively to input from farmers and Yara agronomists. PLANET monitor the growth of their crops. By using Making digital farming simple satellite images, Atfarm creates application In fact, developing the product in iterations is a Planet performance charts for variable rate application (VRA) of unique feature of Atfarm. A dedicated user re- Planet risks crop nutrition. search team across three continents brings new prototypes into the field with the farmers and VRA is essential for best practice nutrient brings the feedback directly to the developers. PROSPERITY management. Conditions on any given farm If they see a trend in the feedback, Yara is able Cracking the reliability code Atfarm map Atfarm creates application charts for will vary when it comes to sunlight, soil quality, to make changes to the tool quite quickly. Prosperity performance terrain, and other factors. This means that the variable rate application of crop nutrition. Prosperity risks nutrient needs of the crops will vary accordingly. The biggest update to the Atfarm tool will come The dots precisely indicate the required The Yara share later this year, with new capabilities on weather nitrogen quantity for each area of the field. To ensure the crop reaches its full potential and spreading recommendations, sustainability, to avoid unnecessary costs for the farmers, growth stage simulations, and pre-season crop External framework guidance nutrient leeching and runoffs, crop nutrition nutrition planning among other things. should be applied based on the specific crop 03 FROM THE BOARDROOM Atfarm facts: needs. By making the complex simple and updated and tailored agronomic advice accessible to 04 FINANCIAL STATEMENTS • 100k users signed up • Active in more than 15 markets Continuous development farmers all over the world, digital farming is Since its launch in 2018, more than 100.000 the future of sustainable food production. • 10 million registered hectares farmers have started their digital precision
49 farming journeys. And since then, numerous Yara Integrated Report 2020 Energy efficiency GHG intensity
2023 target: 32.7 Gj/tonne ammonia 2025 target: 2.7 t CO2e /t N
34.1 33.9 33.7 33.7 33.2 32.7 01 THIS IS YARA 35 3.5 3.1 2.9 3.0 3.0 3.0 2.7 02 YEAR IN REVIEW PLANET 30 3.0
25 2.5 PEOPLE Planet Women in Agronomy 20 2.0 People performance performance 15 1.5 People risks 10 1.0 Environmental performance has been 5 0.5 PLANET identified as a materially important Making digital farming simple part of Yara’s license to operate. 0 0 2016 2017 2018 2019 2020 2023 2016 2017 2018 1) 2019 2020 2025 Planet performance The corporate KPIs were updated 1) 2018 onwards, Scope 1 emissions from own generation Planet risks through the 2020 strategy update, of electricity has been included. with four KPIs linked to the Planet GHG emissions, Scope 1+2 Hectares under management 1) PROSPERITY performance area. (market based) 2025 target: 150 million hectares Cracking the reliability code 2030 target: -30% from a 2019 baseline Prosperity performance Further, nutrient losses from farmers’ fields 30 150 Prosperity risks is an important externality in the value 30 150 The Yara share chain. Knowledge sharing, precision farming 25 technology and proper fertilizer application 120 18.5 18.5 management can reduce such risks – here 1 7.7 External framework guidance 20 1 7.1 reported as Ha under digital management. 16.2 90
15 -30% 03 FROM THE BOARDROOM Yara reports with full transparency on all envi- 60 ronmental aspects of our operations. Whereas 10 04 FINANCIAL STATEMENTS the most material indicators are reflected here, 30 14.5 5 10.7 a complete account is found in the separate 4.6 Sustainability Report report, published on yara. N/A N/A 0 0 50 com alongside the annual reporting. 2016 2017 2018 2019 2020 2030 2016 2017 2018 2019 2020 2025 2) From a 2019 baseline 1) The indicator definition is being updated, meaning the historic figures and 2025 target are not fully aligned, ref. to indicator definition on p52. Yara Integrated Report 2020 Corporate KPIs Unit of measure
Energy efficiency 2020 2019 2018 2017 2016 01 THIS IS YARA Consumption of hydrocarbons, mostly Energy consumption 279 285 301 266 273 PJ natural gas, for the ammonia production 02 YEAR IN REVIEW Emissions to air: NO 8,300 8,500 9,400 7,800 7,600 tonnes NO process is both Yara’s main variable cost and x 2
driver of GHG emissions. Energy efficiency Emissions to air: SO 2,100 2,100 2,800 2,000 2,000 tonnes SO PEOPLE x 2 improvements come with a dual bottom line Dust 2,800 2,500 3,900 3,400 4,200 tonnes Women in Agronomy and climate benefit, and it is expressed as People performance GJ consumed per tonne ammonia produced. Raw materials: Natural gas 239,061,933 249,258,646 245,429,308 219,982,380 227,708,686 MMBtu
People risks The indicator cover 49% of the Tringen Raw materials: Phosphate 2,046,2212) 1,758,096 1,532,427 1,676,671 1,492,123 tonnes P2O5 plant, while Cubatão and Babrala are out of scope. Data including these sites are available Raw materials: Potash 2,356,358 2,057,282 2,143,023 2,302,813 2,352,442 tonnes K2O PLANET in the Sustainability report. Water withdrawal 906 947 913 783 851 million m3 Making digital farming simple Of which in water Planet performance stressed areas 2% 2% 3% 4% 3% % GHG intensity indicators Planet Planet risks The GHG intensity KPI is defined as tonnes Sites in flood hazard areas 15 15 15 1) 11 11 # of sites emissions of CO e per tonne nitrogen in 2 Environmental provisions 76 77 75 48 37 USD million Yara’s own produced products. The CO e PROSPERITY 2 Fines and penalties for emissions include scope 1, scope 2 (electricity environmental breaches 340,500 229,000 300,000 146,000 115,000 USD Cracking the reliability code consumption) and emissions from production Green revenues 43 38 n.a. n.a. n.a. % Prosperity performance of Yara’s third-party ammonia consumption. Prosperity risks Information on transportation and other Green investments 64 77 n.a. n.a. n.a. % The Yara share scope 3 emissions is found in the Sustainability 1) Babrala and the three Cubatão sites included 2018 onwards report. The KPI is to reduce the carbon in- 2) The scope of products covered has been expanded for the 2020 figure, which is therefore not directly comparable to previous years. tensity by >10% from 2018 to 2025. External framework guidance Our ambition is to become climate neutral by 2050. 03 FROM THE BOARDROOM
GHG scope 1 + 2 emissions 04 FINANCIAL STATEMENTS On top of the intensity KPI, Yara in 2020 established an additional climate KPI; to reduce the absolute scope 1 + 2 emissions by
51 30% by 2030 from a 2019 baseline. Yara Integrated Report 2020 Hectares under management Water withdrawal Green revenues Knowledge transfer to farmers is a lever which can The total withdrawal figure is given here. In Yara’s In preparation for the EU Taxonomy requirements contribute to multiple benefits, including improved production, water is primarily used for cooling purpos- for disclosures, Yara has engaged Cicero Green to 01 THIS IS YARA productivity, farmer income and environmental per- es. Thus, over 90% the water that Yara withdraws is assess the ‘greenness’ of our revenues. For ammonia formance. Yara is establishing its digital farm services, returned to the water course. and nitric acid plants, the EU Taxonomy GHG emis- 02 YEAR IN REVIEW and until 2020 the performance is reported as Hect- sions thresholds have been utilized in the analysis. For ares owned by farmers, who have registered them Water withdrawal in water stressed areas remaining parts of the revenues, the Cicero Shades of PEOPLE in our digital tool(s). The 2025 KPI is measured as Yara’s plants are located across several continents and Green methodology has been applied. The resulting Women in Agronomy millions of Ha under active management, which adds operate under highly variable environments. Our sites figure is not an EU Taxonomy compliant disclosure. People performance an activity qualifier to the indicator. As of Q1 2021 the have undergone an initial water risk screening using People risks reporting of the indicator will be updated in accor- the WRI Aqueduct water risk atlas tool. The figure Green investments dance with the new definition. presents percentage of water withdrawals which occur In preparation for the EU Taxonomy requirements for in areas of high or extremely high baseline water disclosures, Yara has engaged Cicero Green to assess PLANET Performance indicators stress. Further analysis is ongoing through 2021. the ‘greenness’ of our CAPEX. For ammonia and nitric Making digital farming simple acid plants, the EU Taxonomy GHG emissions thresh- Planet performance Energy consumption Sites in flood hazard areas olds have been utilized in the analysis. For remaining Planet risks Consumption of hydrocarbons, mostly natural gas, is Our sites have undergone an initial water risk screening parts of the CAPEX, the Cicero Shades of Green meth- both the main feedstock and the main energy source using the WRI Aqueduct water risk atlas tool. The odology has been applied. The resulting figure is not supporting the ammonia production process. figure presents the number of major sites which are an EU Taxonomy compliant disclosure. PROSPERITY located in areas at risk of flooding. Further analysis is Cracking the reliability code Emissions to air ongoing through 2021. Prosperity performance The main emissions to air from fertilizer plants and Prosperity risks phosphate mines are nitrogen oxides, sulphur oxides, Environmental provisions The Yara share ammonia, fluorides, and dust. More details are available Environmental provisions are the estimated future cost in the Sustainability report. for environmental remediation on Yara’s sites. More infor- mation is found in the notes to the financial statements. External framework guidance Raw materials consumption Ammonia is produced from nitrogen from the air Fines and penalties 03 FROM THE BOARDROOM reacting with hydrogen, mostly harvested from natural Total sum of fines and other penalties for environ- gas. Yara also sources phosphorous and potash, e.g. mental breaches. If any severe cases over a materiality 04 FINANCIAL STATEMENTS for NPK fertilizers. Yara also owns and operates two threshold of USD 5 million are identified, a description phosphorous mines. is available in the separate Sustainability report.
52 Yara Integrated Report 2020 Planet risks
01 THIS IS YARA Risk appetite Product portfolio exposure Environmental exposure Risk factors 02 YEAR IN REVIEW Risk appetite is broadly defined as the to regulatory changes from operations or products We commit to excellence in our HESQ level of risk an entity deems acceptable Yara has a low risk appetite for ex- Yara strives to be best in class com- performance, which is imperative to PEOPLE in the pursuit of overall goals. Deter- posure to incompliance to regulatory pared to industry peers and is commit- protect our employees and contractors, Women in Agronomy mined by the Board, these risk appetite requirements impacting the product ted to explore and promote the highest and uphold reliability and performance. People performance statements set boundaries for strategic portfolio in our value chain, and standards of environmental responsi- We have adopted a systematic approach People risks initiatives, guide resource allocation proactively seeks to reduce exposure bility and has a low risk appetite for to monitoring and reviewing the quality and aid decision-making within the to impact on operational, commercial, causing damage to the environment as a and handling of all our products, ensur- company. financial and security areas. Yara will result of our operations or products. ing that proper care is taken along the PLANET proactively liaise with regulatory bodies entire value chain. Making digital farming simple in order to adapt and adhere to stricter Planet performance regulations. Planet risks
PROSPERITY Planet risks Factor Mitigation Cracking the reliability code Natural disasters Yara's production and logistics operations and warehouses could be We have implemented specific precautionary measures for operations located in Prosperity performance directly or indirectly affected by natural disasters. areas more likely to be affected by extreme weather conditions and natural disasters. Prosperity risks Significant efforts are also put into crisis management training and scenario planning, to minimize potential threats to security, health and safety for our operational assets. The Yara share
Environmental risks and regulatory framework Environmental, including climate, exposure create strategic risks for Yara’s Yara continuously discuss and participate in various arenas to understand and influence External framework guidance on production/ application of nitrogen fertilizer license to operate. There is an increasing trend of stricter governmental existing and ongoing new regulations affecting our business. The risk is primarily regulations impacting production, (e.g. Emission trading system in Europe mitigated by contact with governmental bodies to ensure that balanced information is and stricter limits of emissions to air and water across the world) and available to reach optimal solutions. Yara continuously discuss with the EU regarding 03 FROM THE BOARDROOM application of fertilizer related both to the environmental aspects and the future CO2 emissions structure for the fertilizer industry arguing that the European safety of handling and applying fertilizer. These regulations could have a ammonia industry is the most efficient globally which needs to be reflected when 04 FINANCIAL STATEMENTS substantial impact on Yara’s earnings. policies are made. On existing assets, Yara has established rigid management systems and policies to manage the environmental impacts of our operations and to reduce exposure. Moving forward, resources are allocated to develop new technologies and business models to meet the expected environmental and climate requirements.
53 Yara Integrated Report 2020 Planet risks Factor Mitigation
Climate risks Climate change pose both up and downside risks for the company. Yara’s investments into assets are evaluated against extreme weather events. Climate risks are related to our markets, operational risks linked to our Through stakeholder dialogues, Yara promotes low carbon solutions, life cycle 01 THIS IS YARA assets, in addition to the supply chain/ infrastructure risks. Climate change perspectives and resource smart solutions. As a materially important topic, climate is leads to societal processes which may pose transition risks such as market one of the focus areas of Yara’s business development and strategy processes, where 02 YEAR IN REVIEW preferences, legislation and technology. The European Green deal aims for we aim to provide knowledge-based solutions. Efforts include resource optimization the EU to be climate neutral by 2050, supported by additional regulatory and reducing carbon footprints in agriculture, green ammonia projects and digital PEOPLE actions such as the ETS. This transition to a climate-neutral society is solutions, which are well-suited to support EU ambitions for reduced emissions. Yara both an urgent challenge and an opportunity, with a potential downside supports the continuation of the ETS system and its free allowances as the best Women in Agronomy market risk and risk for stranded assets. The societal aspects are as much approach to mitigate carbon leakage risk. Yara also advocates the possible introduction People performance opportunities as risks. of more instruments, that should provide certainty for low-carbon investments of the company and would avoid market distortions. People risks
PLANET Making digital farming simple Planet performance Planet risks
PROSPERITY Cracking the reliability code Prosperity performance Prosperity risks The Yara share
External framework guidance
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
54 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW Prosperity
PEOPLE Women in Agronomy Yara has performed well during 2020 People performance delivering improved capital returns, as People risks lower gas prices, increased deliveries of premium products and a stronger PLANET US Dollar have offset weaker commodity Making digital farming simple prices and slightly higher underlying Planet performance fixed cost. Planet risks
Yara’s industry fundamentals are robust, PROSPERITY as the twin challenges of resource efficiency Cracking the reliability code and environmental footprint require Prosperity performance Prosperity risks significant transformations within both The Yara share agriculture and the hydrogen economy. Yara’s leading food solutions and ammonia External framework guidance positions are well placed to both address and create business opportunities from 03 FROM THE BOARDROOM these challenges.
04 FINANCIAL STATEMENTS
55 Yara Integrated Report 2020 CASE Cracking the reliability 01 THIS IS YARA code 02 YEAR IN REVIEW For years Yara’s Tringen plant in Trinidad has struggled with PEOPLE recurring issues causing production losses. Now they’re Women in Agronomy turning it around with our targeted reliability program. People performance People risks Since 2019 Tringen unit 1 has added around 50,000 tonnes/year of ammonia production 1) without any significant investment in infra- PLANET structure. This has been achieved through Yara’s targeted reliability program for underperforming units (RCIP), which builds on the Making digital farming simple Yara Productivity System (YPS). Planet performance Planet risks RCIP pilots were recently completed at the plants in Tringen and Tertre (Belgium) with the full program now being rolled out to other PROSPERITY plants including Pilbara, Cubatao and Ambes. Cracking the reliability code
Prosperity performance Both pilot plants have increased their Overall Equipment Effectiveness Prosperity risks (OEE) by double digits since implementing the program, something The Yara share EVP Yara Global Plants and Operational Excellence, Pål Hestad, believes can be repeated at other sites. External framework guidance “I’m confident we can replicate the improvement we’ve seen in Trinidad “There’s still significant potential to improve the reliability of our existing plants,” says Pål. “I’m confident we can replicate the 03 FROM THE BOARDROOM and Tertre, enabling us to hit our improvement we’ve seen in Trinidad and Tertre, enabling us to hit our 2023 improvement targets.” 2023 improvement targets.” 04 FINANCIAL STATEMENTS +50,000 Pål Hestad tons/year ammonia Fix it forever to stop forever fixing EVP Yara Global Plants and Operational Excellence production The RCIP program helps plants eliminate complex recurring issues
56
1) This volume increase relates to the whole of Tringen 1, of which Yara has 49% ownership. Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW
PEOPLE Women in Agronomy People performance People risks
PLANET Making digital farming simple Planet performance Planet risks
through root cause problem solving, among other techniques. PROSPERITY YARA IMPROVEMENT PROGRAM (YIP) One such issue at Tringen involved a critical fan, which occasionally Cracking the reliability code Delivering on YIP 2.0 by 2023 through: failed and brought the plant down with it. Each time this occurred, plant Prosperity performance operators would replace the fan and get the plant back online. Prosperity risks • More volumes from our existing plants by improving reliability The Yara share But while their quick action minimized downtime, it didn’t solve the • Reduced spend on consumption factors, such as energy, through underlying issue. And the losses added up over time. Seeking a permanent better reliability and new technology solution, this issue was targeted with RCIP. External framework guidance • Reduced variable unit cost through scale, advanced category management, and collaboration Rather than reacting and solving the symptom, the team at Tringen used 03 FROM THE BOARDROOM • Reduced fixed costs through standardization and scale benefits root cause problem solving, and found a multi-barrier approach to eliminate the issue for good, including a design simplification, a change 04 FINANCIAL STATEMENTS • Improved commercial effects by more targeted offerings and in the operational response to the fan and replacing an old cable. channel development These changes mean higher uptime and increased output at a time
57 when favorable market conditions mean every extra ton will secure an attractive price. Yara Integrated Report 2020 Delivering Production output 1) Fixed cost 2) improved Million tonnes. Production adjusted for Fixed cost in billion USD. Total fixed operations & major turnarounds and market optimi- cost adjusted for portfolio and currency 01 THIS IS YARA superior profits zation effects, to better reflect underly- effects ing performance 02 YEAR IN REVIEW PROSPERITY 2023 target: < USD 2.3 billion 2023 target: 32.8 million tonnes PEOPLE Prosperity Women in Agronomy 32.8 35 2.5 2.31 2.29 2.32 2.3 People performance 28.7 28.8 29.0 performance 30 People risks 1) Production output measured 2.0 on rolling 12 months, adjusted 25 for major turnarounds and market optimization effects. 20 1.5 PLANET Adjustments are done to better reflect the underlying production 15 1.0 Making digital farming simple performance. Numbers exclude Qafco and Lifeco volumes. 2018 10 Planet performance baseline includes growth and 0.5 debottleneck projects already 5 Planet risks communicated, and is adjusted NA NA NA NA Yara’s full-year 2020 EBITDA excluding related to Galvani and Pardies 0 0 portfolio effects. 2016 2017 2018 2019 2020 2023 2016 2017 2018 2019 2020 2023 special items was at the same level PROSPERITY as the previous year, as lower prices Cracking the reliability code were off-set by lower energy cost and Prosperity performance 2) improved product mix. Creating ROIC Prosperity risks sustainable Return on invested capital reflect the value created for shareholders The Yara share returns Mid-cycle target: > 10%
10.0 External framework guidance 10 8.0 8.0 8 03 FROM THE BOARDROOM 6.60
6 04 FINANCIAL STATEMENTS 4.00 3.80 4
2) See page 249 for definitions, 2 explanations and reconciliations of alternative Performance Measures 0 58 (APMs). 2016 2017 2018 2019 2020 Mid-cycle Yara Integrated Report 2020 ESG rating
Yara integrates ESG into its operations, with solicited scores from MSCI and Sustainalytics.
01 THIS IS YARA MSCI 2020 2019 2018 2017 2016 02 YEAR IN REVIEW Score BBB BB BBB BBB BBB
PEOPLE MSCI rating is scored on the scale: CCC – B – BB – BBB – A – AA – AAA where AAA is best. Yara’s target score: A Women in Agronomy Discalimer statement The use by yara ofany MSCI esg research llc or its affiliates (“MSCI”) data, and the use of msci logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of yara by msci. MSCI services and data are People performance the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. People risks
Sustainalytics PLANET 2020 2019 2018 2017 2016 Making digital farming simple 24.8 28.4 30.8 n/a n/a Planet performance Score Medium Medium High n/a n/a
Planet risks Sustainalytics risk ratings are shown as higher figures presenting higher residual ESG risks. Risk brackets are 0-10: Negligible, 10-20: Low, 20-30: Medium, 30-40: High, 40+: Severe. Yara is ranked as the top performer in the Agri-chemicals subindustry group. PROSPERITY Cracking the reliability code Yara’s full year 2020 EBITDA excluding special items 1) was in line with a year earlier as year earlier reflecting increased deliveries of premium products and ramp-up of Pilbara Prosperity performance lower gas prices, increased deliveries of premium products and a stronger US Dollar TAN plant in Australia. Prosperity risks were offset by weaker commodity prices and slightly higher underlying fixed cost. The Yara share Global Plants & Operational Excellence (GPOE) full year 2020 EBITDA excluding Europe’s full year EBITDA excluding special items was 7% lower than a year earlier as special items was 7% lower than a year earlier mainly due to the QAFCO portfolio lower feedstock costs for ammonia and natural gas were offset by lower realised prices. effect, as lower gas costs were otherwise offset by lower commodity prices and higher External framework guidance fixed costs. Americas full year 2020 EBITDA excluding special items was 5% lower than a year 03 FROM THE BOARDROOM earlier, as higher premium product deliveries and lower fixed costs were offset by lower Industrial Solutions’ full year 2020 EBITDA excluding special items was 13% higher upgrading margins on urea and phosphates. than a year earlier reflecting improved commercial margins. Challenging market situa- 04 FINANCIAL STATEMENTS tion for Maritime throughout the year, while demand for industrial nitrogen was Africa & Asia’s full year 2020 EBITDA excluding special items was 75% higher than a negatively impacted by Covid-19.
59 1) See note 2.3 Segment information on page 126-132 and special items on page 65. Yara Integrated Report 2020 Financial highlights ¹)
USD millions, except where indicated otherwise 2020 2019 2018 2017 2016
01 THIS IS YARA Revenue and other income 11,728 12,936 13,054 11,400 11,597 Operating income 1,176 989 402 457 1,043
02 YEAR IN REVIEW EBITDA 2) 2,223 2,095 1,523 1,348 1,854
EBITDA 2) excl. special items 2,161 2,165 1,525 1,430 1,719 PEOPLE Net income attributable to shareholders of the parent 691 599 159 477 756 Women in Agronomy Basic earnings per share3) 2.58 2.2 0.58 1.75 2.76 People performance Basic earnings per share excl. foreign currency translation and special items3) 3.08 3.09 1.68 1.83 2.44 People risks Net cash provided by operating activities 2,047 1,907 756 791 1,676 1) See page 249 for definitions, explanations and
Net cash provided by/(used in) investing activities 248 (1,044) (2,000) (1,338) (1,267) reconciliations of Alternative Performance Measures (APMs). PLANET Net debt/equity ratio 0.36 0.42 0.43 0.25 0.17 2) EBITDA 2018 and before not adjusted by IFRS 16 Making digital farming simple Net debt/EBITDA excl. special items (last 12 months) ratio 1.36 1.72 2.49 1.66 0.86 Planet performance Average number of shares outstanding (millions) 268.0 272.3 273.2 273.2 273.5 3) USD per share. Yara currently has no share-based compensation programs resulting in a dilutive effect Planet risks Return on invested capital (ROIC) 8.00% 6.60% 3.80% 4.00% 8.00% on earnings per share.
PROSPERITY Key statistics Cracking the reliability code Prosperity performance USD millions, except where indicated otherwise 2020 2019 2018 2017 2016 Prosperity risks Ammonia 7,606 8,479 8,305 7,459 7,504 The Yara share Finished fertilizer and industrial products, excl. bulk blends 21,048 22,060 21,887 20,203 19,497
Yara deliveries (thousand tonnes) 1) External framework guidance Ammonia trade 1,966 2,527 2,478 n/a n/a
Fertiliser 29,045 27,620 27,869 n/a n/a 03 FROM THE BOARDROOM Industrial product 7,086 7,837 8,272 n/a n/a 04 FINANCIAL STATEMENTS Total deliveries 38,097 37,983 38,619 n/a n/a
Yara's Energy prices (USD per MMBtu)
Global weighted average gas cost 3.8 4.7 6.2 5.0 5.0 1) Including Yara share of production in equity-accounted European weighted average gas cost 3.6 5.4 8.3 6.1 6.1 60 investees, excluding Yara-produced blends Yara Integrated Report 2020 Market information
Average of publication prices 2020 2019 2018 2017 2016
01 THIS IS YARA Urea granular (fob Egypt) USD per tonne 246 263 274 243 218
02 YEAR IN REVIEW CAN (cif Germany) USD per tonne 191 226 226 207 198
Ammonia (fob Black Sea) USD per tonne 204 240 288 259 243 PEOPLE DAP (fob US Gulf) USD per tonne 314 356 415 348 354 Women in Agronomy Phosphate rock (fob Morocco) USD per tonne 80 91 89 91 112 People performance
People risks European gas (TTF) USD per MMBtu 3.0 4.8 7.9 5.6 4.5
US gas (Henry Hub) USD per MMBtu 2.0 2.7 3.1 3.0 2.4
PLANET EUR/USD currency rate 1.1 1.1 1.2 1.1 1.1 Making digital farming simple USD/BRL currency rate 5.1 3.9 3.6 3.2 3.5 Planet performance Planet risks Improvement Program PROSPERITY Yara launched an extended improve- partially offset by the closure of the 2020 2019 2018 Cracking the reliability code ment program at its Capital Markets Trinidad plant. Prosperity performance day on June 26 2019, following solid Production - ammonia (kt) 1) 7,696 7,772 7,850 Prosperity risks improvements achieved in the previous Improvement of Energy Efficiency Production - finished products (kt) 1) 21,258 21,067 20,870 The Yara share three years. As part of this, Yara moved compared to the previous year is mainly Energy Efficiency (GJ/T)2) 33.2 33.7 34.1 to reporting operational metrics on a driven by the closure of Yara Trinidad. 3) rolling 12-months (L12M) basis to bet- Fixed Costs (USD millions) 2,322 2,291 2,314 External framework guidance ter reflect underlying performance. Fixed Costs are slightly higher than 2019 Net operating capital (days) 3) 113 115 104 but on track to achieve the 2023 ambition 03 FROM THE BOARDROOM On a rolling 12-month basis, under- level of keeping nominal costs flat. 1) Production output measured on rolling 12 months, adjusted for major turnarounds and market optimization effects. Adjustments are done to better reflect the underlying production performance. Numbers exclude Qafco and Lifeco volumes. 04 FINANCIAL STATEMENTS lying production of ammonia and 2018 baseline includes growth and debottleneck projects already communicated, and is adjusted related to Galvani and Pardies finished fertilizers increased by 115 Net Operating Capital days have portfolio effects. thousand tonnes compared to 2019, as improved by two days compared to 2) Energy Efficiency (GJ/t) looks at the L12M total energy consumption per tonne ammonia produced. improvements during the year were 2019, and remains a priority. 3) For definitions of Fixed cost and Net operating capital days, refer topage 253 in the APM section. 61 Yara Integrated Report 2020 Income tax interest-bearing debt divided by shareholders’ equity The tax cost for the year 2020 is USD 160 million, plus non-controlling interests, was 0.36 compared with which is approximately 19% of income before tax. The 0.42 at the end of 2019. At the end of 2020, the net 01 THIS IS YARA tax rate in 2020 is positively impacted by a tax-exempt debt/EBITDA excl. Special items (last 12 months) ratio gain from the sale of Yara’s 25% stake in QAFCO is 1.4, down from 1.7 at the end of 2019 02 YEAR IN REVIEW and by realized taxable losses when restructuring the corporate holding structure. The effective tax rate for PEOPLE 2019 was approximately 27%, which was negatively Women in Agronomy impacted by a non-recurring provision related to an People performance ongoing tax dispute. See note 2.8 to the Financial People risks Statements for more information.
Net interest-bearing debt Net interest-bearing debt Variance analysis PLANET As a supplement to the consolidated statement of cash Making digital farming simple flows (page 116), this table highlights the key factors USD millions 2020 USD millions 2020 Planet performance behind the development in net interest-bearing debt. Net interest-bearing debt at beginning of period, EBITDA 2020 2,223 including IFRS 16 implementation effect (3,725) Planet risks Net interest-bearing debt at the end of 2020 was USD EBITDA 2019 2,095 Cash earnings 1) 1,653 2,930 million, down from USD 3,725 million at the Reported EBITDA variance 128 Dividends received from equity-accounted PROSPERITY end of 2019. The cash earnings, positive change in investees 9 Special items variance (see page 65 for details) 132 net operating capital and proceeds from sale of equity Cracking the reliability code accounted investee more than offset net investments, Net operating capital change 265 EBITDA variance ex special items (4) Prosperity performance dividends, buy backs and new leases. Net investments Investments (net) (752) Volume/Mix 123 Prosperity risks for the year 2020 amounted at USD 752 million, in- Proceeds from sale of equity-accounted investee 1,000 Price/Margin excluding energy (362) The Yara share cluding USD 769 million of capital expenditures, part- Yara dividend and buy-backs (1,235) Energy price 269
ly offset by cash inflows from investments of USD 17 2) New leases (117) Currency translation 98 million. Growth investments include USD 155 million External framework guidance Other, including foreign currency translation Other (132) related to Rio Grande and Salitre projects in Brazil. Of gain/(loss) (29) Total variance explained (4) the remaining investments, the majority was regular Net interest-bearing debt at end of period (2,930) 03 FROM THE BOARDROOM maintenance investments in Yara’s production system. The proceeds from the sale of equity-accounted invest- 04 FINANCIAL STATEMENTS 1) Operating income plus depreciation and amortization, minus tax paid, net gain/ ees had a positive cash effect of USD 1,000 million. (loss) on disposals, net interest expense and bank charges.
During 2020, Yara paid out dividends and purchased 2) New lease arrangements in scope for IFRS 16 increase the net interest-bearing own shares for a total of USD 1,235 million. The debt without having an immediate cash impact
62 debt/equity ratio at the end of 2020, calculated as net Yara Integrated Report 2020 Financial items Financial items Full-year net financial expense was USD 95 million higher than a year earlier. The variance is primarily USD million 2020 2019 2018 2017 2016 01 THIS IS YARA explained by a higher net foreign currency translation Interest income 61 74 78 75 82 loss this year, especially during first quarter. Interest Dividends and net gain/(loss) on securities 1 2 3 2 4 02 YEAR IN REVIEW expense for the full year was USD 22 million lower Interest income and other financial income 62 76 81 77 87
than a year earlier, driven by lower gross interest- PEOPLE bearing debt and reflecting that interest on taxes for Interest expense (135) (157) (127) (57) (85) Women in Agronomy prior periods was included in the amount reported last Net interest expense on net pension liability (5) (9) (7) (8) (8) People performance year. The foreign currency translation loss this year of Net foreign currency translation gain/(loss) (243) (145) (278) 99 14 People risks USD 243 million comprised a loss of USD 86 million Other (25) (15) (19) (17) (15) on the US dollar denominated debt positions and a Interest expense and foreign currency translation gain/(loss) (408) (327) (431) 17 (94) loss of USD 157 million on internal positions in other PLANET currencies. A year earlier, the US dollar debt positions Making digital farming simple and the internal positions contributed almost equally Net financial income/(expense) (346) (251) (350) 94 (7) Planet performance to the reported net loss. Planet risks Liquidity Production volumes At the end of 2020 Yara had USD 1,363 million in PROSPERITY cash and cash equivalents, and USD 2,270 million in Thousand tonnes 2020 2019 2018 2017 2016 Cracking the reliability code undrawn committed bank facilities. We consider the Ammonia 7,606 8,479 8,305 7,459 7,504 Prosperity performance company’s cash and financial position to be strong. of which equity-accounted investees 181 1,000 1,039 1,061 1,033 Prosperity risks
The Yara share Board conclusion Urea 5,175 6,419 6,327 5,257 5,167
In the opinion of the Board of Directors, the consoli- of which equity-accounted investees 268 1,504 1,517 1,573 1,536 dated financial statements provide a true and fair view External framework guidance Nitrate 6,472 6,225 6,136 6,173 6,044 of the group’s financial performance during 2020 and NPK 6,104 5,697 5,736 5,504 4,891 financial position on 31 December 2020. According to 03 FROM THE BOARDROOM CN 1,640 1,543 1,623 1,511 1,379 section 3–3 of the Norwegian Accounting Act, we con- UAN 959 974 835 931 909 04 FINANCIAL STATEMENTS firm that the consolidated financial statements and the SSP-based fertilizer 647 1,087 1,115 822 1,106 financial statements of the parent company have been prepared based on the going concern assumption, and MAP 51 115 116 - - 1) that it is appropriate to make that assumption. Total Finished Products 21,048 22,060 21,887 20,199 19,497
63 Yara Integrated Report 2020 Deliveries (detailed table) Thousand tonnes 2020 2019 2018 Americas deliveries Urea 2,692 2,615 2,488 Nitrate 1,196 1,117 1,105 01 THIS IS YARA Thousand tonnes 2020 2019 2018 NPK 6,070 5,687 6,138 Yara deliveries 02 YEAR IN REVIEW of which Yara-produced compounds 2,056 1,797 1,699 Ammonia trade 1,966 2,527 2,478 of which blends 3,376 3,441 4,057 Fertiliser 29,045 27,620 27,869 PEOPLE CN 801 679 690 Industrial Product 7,086 7,837 8,272 Women in Agronomy DAP/MAP/SSP 912 1,014 1,247 Total deliveries 38,097 37,983 38,619 People performance MOP/SOP 1,386 1,233 1,073 Other products 1,050 1,115 936 People risks Crop Nutrition deliveries Total deliveries Americas 14,108 13,461 13,677 Urea 6,042 5,909 5,970 of which North America 3,316 3,254 3,026 Nitrate 5,775 5,412 5,425 PLANET of which Brazil 8,813 8,438 8,474 NPK 10,574 9,943 10,360 Making digital farming simple of which Latin America ex Brazil 1,979 1,769 2,177 of which Yara-produced compounds 6,140 5,618 5,501 Planet performance of which blends 3,749 3,801 4,412 Africa & Asia deliveries Planet risks CN 1,433 1,237 1,239 Urea 2,341 2,497 2,621 UAN 1,405 1,287 1,182 Nitrate 245 237 192 DAP/MAP/SSP 1,014 1,096 1,321 PROSPERITY NPK 1,735 1,542 1,549 MOP/SOP 1,473 1,326 1,164 Cracking the reliability code of which Yara-produced compounds 1,453 1,266 1,302 Other products 1,328 1,411 1,209 Prosperity performance CN 186 166 168 Total Crop Nutrition deliveries 29,045 27,620 27,869 Other products 314 264 232 Prosperity risks Total deliveries Africa & Asia 4,821 4,707 4,762 The Yara share Europe deliveries of which Asia 3,652 3,525 3,743 Urea 1,009 796 860 of which Africa 1,169 1,182 1,019 Nitrate 4,334 4,057 4,128 External framework guidance NPK 2,769 2,714 2,673 Industrial Solutions deliveries of which Yara-produced compounds 2,632 2,555 2,500 Ammonia 1) 543 625 699 03 FROM THE BOARDROOM CN 446 393 380 Urea 1) 1,577 1,792 2,321 Other products 1,558 1,492 1,389 04 FINANCIAL STATEMENTS Nitrate 2) 1,069 1,146 1,121 Total deliveries Europe 10,116 9,452 9,430 CN 348 434 412 Other products 3) 1,944 2,028 1,967 Water content in industrial ammonia and urea 1,605 1,811 1,752 3) Including sulphuric acid, ammonia Total Industrial Solutions deliveries 7,086 7,837 8,272 64 1) Pure product equivalents. 2) Including AN Solution. and other minor products. Fixed cost effect EBITDA effect Operating income effect Yara Integrated Report 2020 Special items USD million 2020 2019 2020 2019 2020 2019 Environmental provisions 1 (9) 1 (9) 1 (9) Impairment of non-current assets - - - - (25) (27) Scrapping of project development and provision for demolition 01 THIS IS YARA (1) - (6) - (5) - Additional bonus to employees (4) - (4) - (4) - 02 YEAR IN REVIEW Total Europe (4) (9) (9) (9) (34) (36)
Environmental provisions (4) (2) (4) (2) (4) (2) PEOPLE Impairment of non-current assets - - - - (3) (11) Women in Agronomy Provision related to closure of plant 4 (24) 4 (24) 4 (26) People performance Additional bonus to employees (7) - (7) - (7) - People risks Total Americas (7) (26) (7) (26) (10) (39)
Impairment of non-current assets - - - - (2) (3) PLANET Contract derivatives gain/(loss) - - 14 14 14 14 Making digital farming simple Damaged inventory - - - 3 - 3 Additional bonus to employees (2) - (2) - (2) - Planet performance Total Africa & Asia (2) - 12 16 10 14 Planet risks Contract derivatives gain/(loss) - - - (1) - (1)
Gain on sale of Qafco - - 97 - 97 - PROSPERITY Provision for fuel taxes - - 1 (32) 1 (32) Cracking the reliability code Additional bonus to employees (2) - (2) - (2) - Prosperity performance Total Global Plants & Operational Excellence (2) - 97 (33) 97 (33)
Prosperity risks Impairment of non-current assets - - - - - (3) The Yara share Dismantling provision for closed site - (8) - (8) - (6) Release of provision related to discontinuation of pilot plant - 3 - 3 - 3 Additional bonus to employees (2) - (2) - (2) - External framework guidance Total Industrial Solutions (2) (6) (2) (6) (2) (6)
Impairment of non-current assets 03 FROM THE BOARDROOM - - - - (15) - Action Africa (20) - (20) - (20) - 04 FINANCIAL STATEMENTS Portfolio management costs (7) (13) (7) (13) (7) (13) Additional bonus to employees (2) - (2) - (2) - Total Other and Eliminations (28) (13) (28) (13) (44) (13)
Total Yara (44) (53) 62 (70) 17 (113) 65 Yara Integrated Report 2020 Prosperity risks
01 THIS IS YARA Risk appetite duction as well as sourcing from third Tax jurisdiction compliance exposure sure related to financial risk not derived 02 YEAR IN REVIEW Risk appetite is broadly defined as the parties. Yara has a low risk appetite Within the framework of tax laws and from the underlying business. Yara level of risk an entity deems acceptable and seeks opportunities to diversify regulations we optimize our tax cost has a low to moderate risk appetite for PEOPLE in the pursuit of overall goals. Deter- external supply options and increase in the same way as other costs. Yara economic currency exposure optimizing Women in Agronomy mined by the Board, these risk appetite production of phosphate rock. does not pursue tax solutions without the cost of hedging with estimated cur- People performance statements set boundaries for strategic existence of commercial purpose and rency movements. Limits for economic People risks initiatives, guide resource allocation JV ownership structure is committed to a transparent manage- exposure are set per currency and on a exposure – new entries and aid decision-making within the ment of tax. country basis. company. When entering into new JVs, Yara has PLANET a low risk appetite for minority equity Long term credit rating down Risk factors Making digital farming simple Bribery, corruption and positions and will only engage in JVs grade exposure Due to its global operation, Yara is Planet performance competition law exposure provided that agreements are com- Yara believes a solid financial base is exposed to various financial risks. Yara Planet risks We are committed to upholding high mercially attractive, secure acceptable the foundation for pursuit of sound has in place, and is constantly develop- standards for human rights, ethical governance standards, policies and growth opportunities, and have a low ing, comprehensive policies, procedures and lawful conduct across the organi- procedures, and financial control for risk appetite for financial exposure not and tools to manage these risks. In PROSPERITY zation in relation to business partners, Yara. Yara will only enter into new JVs derived from the underlying business. some cases, Yara may utilize derivative Cracking the reliability code investors, regulatory authorities and where we are confident that we can We have a low risk appetite for a credit instruments, such as forwards, options Prosperity performance society at large. We have zero tolerance bring Ethics & Compliance and HESQ rating downgrade to below investment and swaps, to reduce financial risk Prosperity risks for bribery, corruption and violation of standards to an acceptable level. grade BBB/Baa2. We accept the un- exposures. The Yara share competition law. derlying US dollar exposure embedded Production reliability exposure in the Yara business model but keep a Phosphate rock sourcing exposure Yara has a low risk appetite for un- major part of the company’s debt in US External framework guidance Securing key raw materials for our planned production downtime and dollar as a partial hedge. fertilizer production is crucial for our aims to produce optimally at all times 03 FROM THE BOARDROOM production plants. The demand for raw balancing investments to improve regu- Exposure to non-USD currencies materials is covered by our own pro- larity and plant profitability. We have a low risk appetite for expo- 04 FINANCIAL STATEMENTS
66 Yara Integrated Report 2020 Prosperity risks Factor Mitigation
Corruption risk Corruption appears in many forms throughout the world, usually in the Our zero-tolerance stance on bribery and corruption is systematically implemented form of “improper advantages”. With operations in over 60 countries Yara and communicated throughout our organization and to business partners through 01 THIS IS YARA is exposed to countries, markets and counterparts with varying ethical policy commitments, trainings and awareness raising. Yara’s Ethics and Compliance standards and business conduct. Corruption poses both compliance and department coordinates and oversees the company’s work in this area through Yara’s 02 YEAR IN REVIEW reputational risks to Yara and our business partners. Compliance Program. Yara’s Integrity Due Diligence process is defined to identify and mitigate risks related to business partners on various topics, including corruption, PEOPLE human rights and labor rights. Our whistle-blowing channels allow employees, consultants and third parties to raise concerns anonymously. Women in Agronomy People performance Production reliability Production unreliability and irregularities may result in lost volumes and We actively seek to increase plant reliability and minimize irregularities by refining People risks contribution. Increased plant reliability is a key driver of organic growth in and implementing companywide technical and operational standards along with our production system. best practices for operations, maintenance and turnarounds, and through continuous
investments in process safety. Employees undergo extensive training and risk PLANET awareness programs, and process safety and productivity are subject to frequent and regular audits. Yara’s company-wide Improvement Program focuses on improving cost, Making digital farming simple reliability and operational efficiency. Planet performance Planet risks Supply chain disruptions Yara’s ability to produce and supply markets with products can be Yara has centralized functions as well as local operations, for management of in- and impacted negatively by disruptions in our supply chain, outbound supply chains securing raw materials to our production units and supply of products to the markets. Yara is operating globally and we have flexibility and PROSPERITY measures built into our business model to adjust for potential irregularities. Cracking the reliability code Financing risk Refinancing of maturing loans or establishment of new financing may be Yara’s strategy for mitigating financing risk is to maintain a solid financial position Prosperity performance difficult or costly to arrange. Adverse financial market conditions could with a strong credit rating. Yara reduces the refinancing risk by basing its long-term Prosperity risks lead to higher funding costs and postponement of projects. funding on a variety of sources to avoid dependency on individual markets, and by timing the maturity dates of large facilities to avoid them falling due at the same The Yara share time. Committed liquidity reserves are maintained to meet unforeseen costs. Yara has access to sufficient funding and borrowing facilities to meet currently foreseeable
requirements, combined with a cash position that covers short-term needs. External framework guidance
Credit risk Credit risk represents exposure to potential losses deriving from non- Credit risk is monitored and managed by the business units and expert organizations 03 FROM THE BOARDROOM performance of counterparties. on the basis of standard Yara policy, procedures and regular reporting. Yara has a well- established system for credit management, with defined exposure limits at customer, 04 FINANCIAL STATEMENTS financial institution and country level. A number of instruments, such as credit insurance, letters of credit and bank guarantees, are deployed to mitigate credit risk. Yara’s geographically diversified portfolio reduces the overall credit risk of the group.
67 Yara Integrated Report 2020 Prosperity risks Factor Mitigation
Currency risk As the fertilizer business is essentially a US dollar business, prices of Yara keeps a major part of its debt in US dollars in order to reduce overall economic Yara’s most important products and raw materials are either directly currency exposure. Yara also utilizes derivative instruments to manage foreign 01 THIS IS YARA denominated or determined in US dollars. In markets outside the USA, currency exchange rate risks. A well-established system for currency risk management local prices will generally adjust to fluctuations in the US dollar exchange is in place, with defined currency exposure limits and standardized exposure 02 YEAR IN REVIEW rate, with a certain time lag. measurement tools. Yara’s geographically diversified portfolio reduces the company’s overall currency risk. PEOPLE Women in Agronomy Interest rate risk Interest rates on different currencies vary depending on the economy Interest rate risk is managed on an assessment of the financial markets and and political actions, which will influence Yara’s funding cost over time. macroeconomic development, in relation to the expected impact an interest change People performance However, the overall exposure of our business will have on Yara’s financial performance. As a risk mitigation measure, Yara keeps People risks to interest rate fluctuations is part of the long-term debt portfolio in fixed interest rate agreements. Yara also utilizes considered low. derivative instruments to manage interest
rate risks. PLANET Making digital farming simple Planet performance Planet risks
PROSPERITY Cracking the reliability code Prosperity performance Prosperity risks The Yara share
External framework guidance
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS
68 Yara Integrated Report 2020 The Yara share 120
110
01 THIS IS YARA Yara aims to be an attractive 100 investment for shareholders, and to 02 YEAR IN REVIEW provide competitive returns compared 90 PEOPLE to other investment alternatives. Women in Agronomy The Yara share shall be liquid and 80 People performance an attractive investment opportunity. 70 People risks
60
PLANET 30.12.19 30.01.20 30.02.20 30.03.20 30.04.20 30.05.20 30.06.20 3 0.07.20 30.08.20 30.09.20 30.10.20 30.11.20 30.12.20 We are committed to serving all our share- Making digital farming simple holders and potential investors by providing Yara share price indexed (31.12.2019 = 100) OBX indexed (31.12.2019 = 100) Planet performance consistent, open and prompt disclosure of Planet risks relevant information. Our policy is equal Common share data treatment of all stakeholders, including ana- lysts, banks, institutional investors, and pri- Q1 Q2 Q3 Q4 2020 2019 PROSPERITY vate shareholders. All information that may Basic earnings per share (0.43) 0.84 0.27 0.73 2.58 2.2 Cracking the reliability code Average number of shares be important and relevant for Norwegian 270,494,236 268,760,982 267,905,871 264,818,040 267,985,860 272,319,232 outstanding 1) Prosperity performance and international markets is provided in the Period end number of shares 269,678,611 268,132,237 266,804,276 263,001,109 263,001,109 271,040,624 Prosperity risks form of releases to the Oslo Stock Exchange outstanding 1) 2) The Yara share (OSE), media and financial newswires. Yara Average daily trading volume 997,431 830,528 590,788 628,097 759,519 ,580,521 Average closing share price 329 327 349 345 338 373 presents quarterly results as live webcasts. Closing share price 314 318 343 356 356 365 External framework guidance (end of period) Share performance and distribution Closing share price high 370 348 378 378 378 419 In 2020, 191 million shares were traded on Market capitalization 03 FROM THE BOARDROOM 85.5 85.3 91.9 95.5 95.5 99.5 the OSE at a value of NOK 64 billion. The (end of period NOK billion) average daily trading volume for Yara shares Dividend per share 3) 18 38 15 04 FINANCIAL STATEMENTS on the OSE during 2020 was 759,519. The Dividend yield 4) 10.7% 4.3% 5) highest closing price during the year was Total shareholder return 9.4% 10.0%
NOK 377.57 and the lowest was NOK 1) Excluding own shares 3) Including 20 NOK per share proposed for 2020 and 4) Based on 31 December share price 2) Only traded on OSE 18 NOK per share additional dividend paid 4Q 2020 5) Measured in US dollars 69 264.74. The year-end closing price was NOK Yara Integrated Report 2020 356.00, representing a 2% increase from the 2019 Shareholding distribution 1) Shareholding distribution1 year-end closing price. Yara’s 2020 total shareholder (as of 31 December 2020) (as of 31 December 2020) return (TSR) was 9.4% measured in US dollars, with Ownership structure: 01 THIS IS YARA dividends reinvested. Yara’s market value as of 31 De- Name Holding (%) cember 2020 was NOK 93.6 billion. 02 YEAR IN REVIEW Ministry of Trade, Industry and Fisheries 36.2 At year-end 2020 Yara had 47,417 shareholders. Norwegian National Insurance Scheme fund 7.1 PEOPLE Non-Norwegian investors owned 39.9% of the total Sprucegrove Investment Management, Ltd. 2.8 Women in Agronomy stock, of which 16.3% were from the United States The Vanguard Group, Inc. 2.0 People performance and 6.0% from the United Kingdom. The Norwegian BlackRock Institutional Trust Company, N.A. 1.9 People risks State, through the Ministry of Trade and Industry, Polaris Capital Management, LLC 1.7 is the largest single owner with 36.2% of the shares. Norwegian private ownership of Yara shares was Storebrand Kapitalforvaltning AS 1.4 PLANET 23.9% at the end of 2020. DNB Asset Management AS 1.4 36.2% Making digital farming simple Tempelton Investment Councel, L.L.C 1.3 Planet performance 6% 23.9% KLP Forsikring 1.2 Planet risks Fidelity Management & Research Company 1.2
State Street Global Advisors (US) 1.1 Shareholding distribution 16.3% PROSPERITY 1 7.7 % (as of 31 December 2020) Arrowstreet Capital, Limited Partnership 1.1 Cracking the reliability code Ownership structure: Handelsbanken Asset Management 1.0 Prosperity performance Nordea Funds Oy 1.0 Prosperity risks No of shares No of shareholders % of share capital Ruffer LLP 0.9 The Yara share 1-100 24,838 0.3% UBS Asset Management (UK) Ltd. 0.9 101-1,000 13,588 1.7% Norwegian state INVESCO Asset Management Limited 0.8 Norwegian private External framework guidance 1,001-10,000 2,609 2.9% SAFE Investment Company Limited 0.8 US 10,001-100,000 585 7.2% Alfred Berg Kapitalforvaltning AS 0.7 03 FROM THE BOARDROOM UK 100,001-1,000,000 189 22.4% Danske Invest Asset Management AS 0.6 Other 04 FINANCIAL STATEMENTS above 1,000,000 31 65.5% Total 41,840 1) This shareholder list is delivered by Nasdaq and VPS through their service Nominee ID. The list is made by analyzing information provided by registered shareholders on request from Yara International. Neither Nasdaq nor VPS guarantee that the information is complete. For a list of the largest registered shareholders as of 31 December 2020, see 70 note 11 on page 235 in this Integrated Report. Yara Integrated Report 2020 ADR performance and voting rights Yara’s Board will propose to the Annual General strong market position and cost leadership, Yara is rated Yara has a sponsored level 1 ADR (American De- Meeting a dividend payment of NOK 20 per share for investment grade “Baa2” with Moody’s and “BBB” pository Receipt) program in the United States. The 2020, which represents approximately 90% of net in- with Standard & Poor’s. 01 THIS IS YARA ADRs are not listed, but are bought and sold OTC, i.e. come after non-controlling interests totaling a payment through any broker licensed to buy and sell US securi- of USD 618 million based on outstanding shares at 31 Change of address 02 YEAR IN REVIEW ties. The ADR ratio is two (2) ADRs to one (1) ordi- December 2020 and the USDNOK exchange rate at 31 Shareholders registered in the Norwegian Central nary Yara share. On 31 December 2020, the ADR was December 2020. Securities Depository should send information about PEOPLE quoted at USD 20.80, a 0.2% increase for the year. To changes of address to their registrars and not directly Women in Agronomy find a recent price quote for Yara ADRs please go to The Yara Annual General Meeting on 7 May 2020 to the company. People performance www.adr.com. The ticker symbol is YARIY. authorized Yara’s Board to buy back up to 5% of People risks total shares (13,406,611 shares) before the 2021 Yara Registrar information Shares must be registered with the Norwegian Cen- Annual General Meeting, at a purchase price not less Registered shareholders may contact our registrar in tral Securities Depository (Verdipapirsentralen) in the than NOK 10 and not more than NOK 1,000. A pre- Norway regarding share transfers, address changes PLANET name of the real owner if holders want to vote for their condition for the program was that an agreement was and other issues related to their holding of Yara shares. Making digital farming simple shares at the shareholders’ meeting. Holders of Yara entered into with the Norwegian State where the State The contact details are shown below. Planet performance ADRs should check their voting rights with JPMorgan, committed to sell a proportional share of its holdings Planet risks which is the depository bank for Yara ADRs. to leave the State’s ownership (36.21%) unchanged.
Cash distribution policy 2021 Annual General Meeting Share facts PROSPERITY Yara’s targeted capital structure is a mid- to long-term The Yara Annual General Meeting will take place at Symbol: YAR Cracking the reliability code net debt/EBITDA range of 1.5-2.0 and a net debt/ 17:00 (CEST) Thursday 6 May 2021. Information Listing: Oslo Stock Exchange (OSE) Prosperity performance equity ratio below 0.6. Subject to these requirements, about how shareholders register for the Annual Gen- Yara’s registrar in Norway and ADR depositary bank Prosperity risks Yara’s ordinary dividend shall be 50% of net income. eral Meeting will be published on www.yara.com no Contact details to Yara’s registrar in Norway and ADR deposi- The Yara share Shareholder returns are distributed primarily as later than 21 days prior to the event, including infor- tary bank can be found on the company’s website:
cash, with share buybacks as supplemental lever. The mation on how to register attendance or vote. dividend pertaining to a fiscal year will be declared at yara.com/investor-relations/share-and-debt-information/regis- External framework guidance trar-and-auditor/ Yara’s Annual General Meeting in the following year. Analyst coverage 23 financial analysts provide market updates and 03 FROM THE BOARDROOM 2021 Dividend schedule 2021 Release dates In 2020 Yara paid USD 1,318 million in dividends and estimates for Yara’s financial results, of whom 12 are Ex-dividend date Q1: 23 April 2021 share buybacks 1) representing approximately 224% of located outside Norway. 7 May 2021 Q2: 16 July 2021 04 FINANCIAL STATEMENTS net income in 2019. Dividends accounted for USD 926, Q3: 20 October 2021 Payment date Q4: 8 February 2022 representing approximately 157% of 2019 net income, Rating 19 May 2021 while share buybacks 1) amounted to USD 392 million, Rating agencies Moody’s and Standard & Poor’s have
71 representing approximately 67% of 2019 net income. rated Yara as solid investment grade. Reflecting its
1) including the corresponding committed pro-rata redemption of shares from the Norwegian state to be paid after the 2021 Annual General Meeting. Yara Integrated Report 2020 TCFD REPORTING External framework guidance 01 THIS IS YARA The following indexes provides readers’ guidance on how Yara covers TCFD reporting, EU Guidelines on reporting climate-related information 02 YEAR IN REVIEW and WEF. Stakeholder Capitalism indicators PEOPLE Women in Agronomy People performance Non-Financial Reporting Directive Requirements People risks Policies and Principal Risks EU Guidelines and TCDF Due Diligence and Their Key Performance EU Non-Financial Reporting Directive TCFD Recommended Disclosures Business Model Processes Outcomes Management Indicators PLANET Requirements and TCFD Recommended a) Board’s Making digital farming simple oversight AR, Corp Gov Disclosures: Governance Planet performance b) Management’s role AR, Corp Gov Planet risks a) Climate-related risks and AR, Planet risks opportunities AR, Strategy AR, Strategy PROSPERITY b) Impact of climate- Strategy Cracking the reliability code related risks and opportunities AR, Strategy Prosperity performance c) Resilience of the Prosperity risks organization’s strategy AR, Strategy The Yara share a) Processes for identifying and AR, Risk assessing management External framework guidance AR, Risk Risk b) Processes for Management management managing AR, Planet risks 03 FROM THE BOARDROOM c) Integration into overall risk AR, Strategy 04 FINANCIAL STATEMENTS management AR, Corp Gov AR, Planet risks a) Metrics used AR, Planet to assess performance Metrics & AR, Planet Targets b) GHG emissions performance AR: Yara Integrated Report 2020 AR, Planet 72 SR: Sustainability Report c) Targets performance Yara Integrated Report 2020
TCFD recommended indicators for the chemical industry: EU Guidelines on reporting climate-related information 01 THIS IS YARA
Metric Reported where Comment Metric Reported where Comment 02 YEAR IN REVIEW Revenues Revenues/savings from according to PEOPLE investments in low-carbon Cicero Shades of Scope 1 GHG AR, Planet performance Women in Agronomy alternatives AR, Planet performance. Green People performance Expenditures (OpEx) for low- Scope 2 GHG emissions SR, Planet performance People risks carbon alternatives n.a.
Total energy consumed, broken Scope 3 GHG emissions SR, Planet performance PLANET down by source SR, Planet performance Total fuel consumed—percentage Making digital farming simple from coal, natural gas, oil, and GHG absolute target AR, Planet performance Planet performance renewable sources SR, Planet performance Planet risks Reported for Energy consumption AR, Planet performance Total energy intensity AR, Planet performance ammonia Percent of fresh water withdrawn PROSPERITY in regions with high or extremely Energy efficiency target AR, Planet performance Cracking the reliability code high baseline water stress AR, Planet performance GHG emissions intensity Prosperity performance from buildings and from new Not material to Renewable energy consumption SR, Planet performance Prosperity risks construction and redevelopment n.a. Yara Area of buildings, plants or The Yara share Assets exposed to physical Partial disclosure, properties located in designated climate risks AR, Planet risks analysis ongoing flood hazard areas AR, Planet performance Partial disclosure External framework guidance according to Investment (CapEx) in low-carbon Cicero Shades alternatives AR, Planet performance EU Taxonomy disclosures AR, Planet performance of Green
03 FROM THE BOARDROOM Green Bond Ratio 0% 04 FINANCIAL STATEMENTS
73 Yara Integrated Report 2020 Stakeholder Capitalism metrics Theme Core metrics Reported where Comments At the CEO level, Yara has committed Governing purpose Setting purpose AR, inside cover to implementing the Measuring Stake- 01 THIS IS YARA holder Capitalism white paper in our Quality of governing body Governance body composition AR, Board message reporting. Published by World Econom- Material issues impacting AR, Stakeholders & Stakeholder engagement stakeholders Materiality 02 YEAR IN REVIEW ic Forum in September 2020, the white Principles of Governance paper was developed on basis of the Ethical behavior Anti-corruption SR, Prosperity performance PEOPLE Davos Manifesto 2020, a declaration Protected ethics advice and SR, Codes, policies and key Women in Agronomy on the universal purpose of compa- reporting mechanisms processes People performance nies. The process was supported by the AR, Corp Gov , risks Integrating risk and opportunity chapters for Strategy and People risks International Business Council (IBC) of Risk and opportunity oversight into business process Planet which Yara’s CEO is a member. Yara’s adoption of the People, Planet and Climate change Greenhouse gas (GHG) emissions AR, Planet performance PLANET Prosperity dimensions is a first step of TCFD implementation Ref. above tables Making digital farming simple implementation. Planet Planet performance Nature loss Land use and ecological sensitivity SR, Planet performance Planet risks Water consumption and Freshwater availability withdrawal in water-stressed areas AR, Planet performance
Dignity and equality Diversity and inclusion (%) AR, People performance PROSPERITY Cracking the reliability code Pay equality (%) SR, People performance Prosperity performance Wage level (%) n.a. Prosperity risks People Risk for incidents of child, forced or SR, How we work – Ethic & The Yara share compulsory labour Compliance
Health and well-being Health and safety (%) SR, People performance External framework guidance Skills for the future Training provided (#, $) SR, People performance Employment and wealth Absolute number and rate of 03 FROM THE BOARDROOM generation employment SR, People performance
04 FINANCIAL STATEMENTS Economic contribution SR, Prosperity performance Prosperity Partial disclosure, Financial investment contribution AR, Planet performance Cicero Shades of Green Innovation of better products and services Total R&D expenses ($) n.a. 74 Separate Country-by- Available on yara.com, Community and social vitality Total tax paid country tax report annual reporting page Yara Integrated Report 2020
01 THIS IS YARA FROM THE BOARDROOM 02 YEAR IN REVIEW Delivering on 03 FROM THE BOARDROOM
Corporate governance our commitment Group Executive Board Board of Directors Board message Yara’s Corporate Governance and company processes are set Risk management up to diligently oversee, control and manage the company’s
04 FINANCIAL STATEMENTS risks and opportunities. An open and active corporate governance is crucial for aligning the interests of shareholders, management, employees and other stakeholders.
Success can only be celebrated when it is achieved the right way, and our way of conducting business defines who we are as a company. HESQ and Ethics & Compliance make up our license to operate and are integrated in everything we do.
75 Yara Integrated Report 2020 Governance
01 THIS IS YARA report
02 YEAR IN REVIEW
03 FROM THE BOARDROOM
Corporate governance Group Executive Board Board of Directors Board message Risk management
04 FINANCIAL STATEMENTS
76 Yara Integrated Report 2020 GOVERNANCE REPORT Corporate governance 01 THIS IS YARA
02 YEAR IN REVIEW An open and active corporate governance is crucial for aligning the interests of shareholders, management, 03 FROM THE BOARDROOM We foster employees and other stakeholders. Yara’s Board of Directors an open culture believes that good corporate governance drives long-term Corporate governance of diversity and value creation and promotes sustainable business conduct. Group Executive Board inclusion that Board of Directors promotes the safety Yara is subject to corporate governance reporting requirements Board message and integrity of our according to the Norwegian Accounting Act, section 3-3b, the Oslo Risk management employees, contrac- Stock Exchange’s Oslo Rulebook II – Issuer Rules, Chapter 4.5, and tors, business the Norwegian Code of Practice for Corporate Governance (the 04 FINANCIAL STATEMENTS partners, and “Code”), freely available at www.lovdata.no, www.oslobors.no and www.nues.no, respectively. society at
large. This report follows the system used in the Code and forms part of the Report of the Board of Directors.
1. Implementation and reporting of corporate governance Yara’s Board of Directors promotes and supports open and clear communication of the company’s key governance and decision processes. Yara’s Board of Directors believes that good corporate governance drives long-term value creation and promotes sustainable business conduct. As set out in Yara’s Code of Conduct, Yara is com- mitted to transparency and accountability and adheres to internation- al conventions and national legislation where it operates.
Yara complies with the recommendations of the Code with the excep- tion of separate election of each candidate for the Board of Directors and the Nomination Committee. The justification for this deviation
77 and the selected, alternative solution is provided in section 6 below.
Yara Integrated Report 2020 2. Business company’s website. More details on Yara’s objectives, Yara may execute share buy-back programs as an inte- Yara grows knowledge to responsibly feed the world principal strategies and risk profiles are presented in the gral part of its shareholder policy. Every year since the and protect the planet, to fulfill its vision of a collab- Introduction to the Integrated Report and in the Report company’s IPO, Yara’s Board has secured an authori- 01 THIS IS YARA orative society, a world without hunger and a planet of the Board of Directors. Yara’s objectives, strategies zation from the Annual General Meeting to buy back respected. To meet these commitments, we have taken and risk profiles are evaluated at least annually. up to 5% of total shares in the company during the 02 YEAR IN REVIEW the lead in developing sustainable food solutions, next year, for subsequent cancellation. A precondition including premium crop nutrition products, digital Yara provides information on corporate social respon- for each annual program is that an agreement is made 03 FROM THE BOARDROOM farming tools and close collaboration with partners sibility in accordance with the Norwegian Accounting with the Norwegian State where the State commits to throughout the food value chain. In addition, we are Act in the Board of Directors report. Yara has guide- sell a proportional share of its holdings to leave the Corporate governance committed to enabling the hydrogen economy and lines, principles, procedures and standards in place as State’s ownership (36.21%) unchanged. The mandates Group Executive Board accelerating the green energy transition, by targeting referred to in the Accounting Act through its ethical granted to the Board of Directors for the company to Board of Directors green ammonia opportunities within shipping, agricul- program, and also reports in accordance with the Oslo purchase its own Yara shares are limited in time to the Board message ture and industrial applications. Stock Exchange’s guidance on the reporting of corpo- date of the next Annual General Meeting. Risk management rate responsibility. We foster an open culture of diversity and inclusion 4. Equal treatment of shareholders and transactions with close associates 04 FINANCIAL STATEMENTS that promotes the safety and integrity of our employ- More information about Yara’s corporate values, ees, contractors, business partners, and society at large. ethical program and sustainability is available on the Transactions involving the company’s own shares, such company’s website. as the share buy-back program, are executed via the Founded in 1905 to solve the emerging famine in stock exchange at prevailing stock exchange prices, Europe, Yara has a worldwide presence with about 3. Equity and dividends with on-going disclosure via stock exchange releases 17,000 employees and operations in over 60 countries. Yara’s capital allocation policy is based on an overall and the company’s own web pages. Share redemp- In 2020, Yara reported revenues of USD 11.6 billion. objective to maintain a mid-investment grade credit tions from the Norwegian State are carried out at billion. Yara is headquartered in Oslo, Norway, and is rating, while at the same time providing investors the same price terms as for the buy-backs carried out listed on the Oslo Stock Exchange. with a potential for cyclical upside in dividends. Yara’s via the stock exchange. Yara may execute buy-backs targeted capital structure is a mid- to long-term net via external bank mandate subject to “safe harbor” The scope of Yara’s business is defined in its Articles of debt/EBITDA range of 1.5-2.0 and a net debt/equity exemptions. Association, section 2: ratio below 0.60. Subject to these requirements, Yara’s ordinary dividend shall be 50% of net income. Share- In 2020, there were no significant transactions be- “The objectives of the company are to engage in indus- holder returns are distributed primarily as cash, with tween the company and related parties, except for try, commerce and transport, and to engage in other share buybacks as a supplemental lever. ordinary commercial transactions with subsidiaries activities connected with these objectives. Activities and non-consolidated investees. These were all based may also proceed through participation in or in co- New equity will only be issued in connection with on arm’s length market terms. operation with other enterprises.” concrete step growth opportunities. No general man-
78 date is granted to the Board to increase the company’s For the company’s related party transactions, the man- The Articles of Association are published in full on the share capital. datory regulations in the Norwegian Public Limited Yara Integrated Report 2020 Companies Act (“PLC”) (§§ 3-8 and 3-9) are supple- to. Yara’s Long-Term Incentive Plan requires the Exec- The Guidelines for remuneration of executive person- mented by IFRS (International Financial Reporting utive Management to use the net amount after tax for nel are presented to the Annual General Meeting in ac- Standards) standards. Thus, the members of the Board the purchase of Yara shares, restricting the sale of such cordance with the PLC Chapter 5, see further informa- 01 THIS IS YARA of Directors and Management are required to disclose shares for three years following the purchase. tion regarding the The Guidelines for remuneration of all entities that would be considered to be “related par- executive personnel in Section 12 below. In accordance 02 YEAR IN REVIEW ties” under applicable IFRS regulation. Transactions 6. General meetings with the PLC Chapter 7, the general meeting elects the with such entities are subject to specific disclosure and In accordance with Yara’s Articles of Association and company’s external auditor and approves the auditor’s 03 FROM THE BOARDROOM approval requirements. the PLC, the Yara Annual General Meeting ranks at renumeration. In accordance with Yara’s Articles of the top of the corporate governance structure. Yara’s Association §7, the Annual General Meeting elects the Corporate governance 5. Shares and negotiability Articles of Association §10 require the Annual General Nomination Committee. Group Executive Board The Articles of Association place no restrictions on the Meeting to be held every year before the end of June. Board of Directors transferability of Yara shares, and the shares are freely The Chair of the Board and the CEO are present at Board message negotiable. There are no voting restrictions linked to In accordance with the PLC Chapter 5, the Annual the Annual General Meeting along with the leader of Risk management the shares. General Meeting elects the shareholders’ representa- the Nomination Committee and the external auditor. tives to the Board of Directors and approves the Finan- All Board members and members of the Nomination 04 FINANCIAL STATEMENTS There are no restrictions on the purchase or sale of cial Statements, the Report of the Board of Directors, Committee are encouraged to participate at the An- shares by the Board of Directors and the Executive and any dividend payment proposed by the Board of nual General Meeting. The Annual General Meeting Management as long as insider regulations are adhered Directors. This Corporate Governance Report and the is required to elect an independent person to chair the
General Meetings in 2020 as well as Yara’s CEO, CFO and General Counsel from the Yara Yara also held an Extraordinary General Meeting at Yara’s Management Group (now Group Executive Board). offices in Oslo on 17 November 2020. Due to Covid-19 and in Yara’s Annual General Meeting (AGM) was held on 7 May 2020 accordance with Norwegian temporary legislation in force at at Yara’s offices in Oslo. In order to reduce Covid-19 risk and in In addition to regular matters, the AGM approved a dividend the time, which exempted companies from physical meeting accordance with government recommendations, the shareholders for 2019 of NOK 15.00 per share, approved a reduction of requirements, the EGM was held as a digital meeting with no were urged to follow the AGM via live transmission and to Yara’s share capital from NOK 463,084,482.90 to NOK physical attendance for shareholders. A total of 156,566,380 exercise their shareholder rights by electronic advance voting or 455,824,802.90 related to the executed share buy-back shares, representing 58.39% of the share capital of the Com- by authorizing the Chair of the Board, rather than attending the program with subsequent changes to Yara’s Articles of Asso- pany, were represented at the meeting. The Chair of the Board AGM physically. The shareholders were informed about this in ciation §4 regarding share capital, and approved a new Power was physically present at the meeting, as well as Yara’s CEO, the AGM notice. of attorney to the Board for acquisition of up to 5% (13,406,611 CFO and General Counsel from the Group Executive Board. The shares) of Yara’s share capital with a total face value of up to EGM approved an additional dividend of NOK 18.00 per share A total of 160,173,900 shares, representing 58.8% of the share NOK 22,791,238.70 in the open market and from the Nor- on the basis of the Company’s annual account for the financial capital of the Company, were represented at the meeting. The wegian State. The AGM also elected six shareholder-elected year 2019 and divestment proceeds received during 2020. Chair of the Board, Yara’s external auditor and the Chair of the Board members and four members of the Nomination Com- 79 Nomination Committee were physically present at the meeting, mittee, all for a period of two years. Yara Integrated Report 2020 meeting. The minutes of the Annual General Meeting meeting. In accordance with Yara’s Articles of Associ- Otto Søberg, Chair (CEO of Eksportkreditt Norge AS) are published on the company’s website. ation §9 the due date for shareholders to give notice of their intention to attend the Annual General Meeting Thorunn Kathrine Bakke (Director, Norwegian Min- 01 THIS IS YARA All shareholders are entitled to submit items to the shall be no more than five days prior to the Annual istry of Industry, Trade and Fisheries) Annual General Meeting agenda, and to meet, speak General Meeting. 02 YEAR IN REVIEW and vote at the meeting. In accordance with Norwe- Ottar Ertzeid (Group Executive Vice President DNB gian corporate law and Yara’s Articles of Association 7. Nomination Committee Markets) 03 FROM THE BOARDROOM §9, shareholders registered in the Norwegian Central Yara’s Articles of Association §7 states that the company Securities Depository (“Verdipapirsentralen”) can vote shall have a Nomination Committee consisting of four Ann Kristin Brautaset (Deputy Director Equities at Corporate governance in person or by proxy on each agenda item put for- members elected by the Annual General Meeting, and Folketrygdfondet (the Norwegian National Insurance Group Executive Board ward in the Annual General Meeting. A form for the that the Annual General Meeting approves the procedure Scheme fund)) Board of Directors appointment of a proxy for voting is included in the for the Nomination Committee. The Nomination Com- Board message Annual General Meeting notice, as well as information mittee nominates the shareholder-elected Board mem- The contact details of the Chair of the Nomination Risk management regarding the person nominated by the company to bers, including presenting relevant information about the Committee are available on the company’s website, act as a proxy for shareholders who cannot attend the candidates and an evaluation of their independence, and and shareholders with proposals for new Board mem- 04 FINANCIAL STATEMENTS Annual General Meeting in person. Shareholders reg- proposes the remuneration of the Directors to the Annual bers are encouraged to send those to the Chair. istered in the Norwegian Central Securities Depository General Meeting. The Nomination Committee contacts can also vote electronically in advance on each agenda major shareholders, the Board of Directors and the CEO The Nomination Committee held 17 meetings in 2020. item put forward in the Annual General Meeting. as part of its work on candidate proposals. The Nomi- In 2020, the remuneration to the Chair of the Nomina- nation Committee also recommends which members the tion Committee was NOK 8,200 per meeting The Company has chosen to not follow the Code’s Board should elect as Chair and Deputy Chair. prior to the Annual General Meeting and thereafter recommendation to vote separately on each candidate NOK 8,500 per meeting. The remuneration to the nominated for election to the Board of Directors and The Nomination Committee nominates candidates to other members of the Nomination Committee was Nomination Committee. This choice is based on the the Nomination Committee, hereunder the Chair of NOK 6,200 per meeting prior to the Annual General Nomination Committee’s process being focused on the Nomination Committee, and proposes remuner- Meeting and thereafter NOK 6,400 per meeting. the combined qualifications and experience of the ation of the Nomination Committee Members to the proposed members of the Board of Directors and the Annual General Meeting, including the rationale for its 8. Board of Directors: Composition and Nomination Committee, and that the voting should recommendations. Members of the Nomination Com- independence therefore also be combined. mittee are elected for two-year terms. According to the In accordance with the PLC § 6-12 the Board of Di- Nomination Committee procedure, there should be a rectors has the overriding responsibility for the man- The Annual General Meeting notice is sent to all gradual rotation among the committee members. agement of the company. The Board’s role and respon- shareholders individually, or to their depository banks, sibility is also to supervise the company’s day-to-day at least 21 days in advance of the meeting. The meeting The Nomination Committee consists of the following management and the company’s activities in general,
80 notice includes information regarding shareholders’ members, all of whom are independent of the Board cfr. PLC § 6-13. The responsibility for the day-to-day rights and guidelines for registering and voting at the and Executive Management: management has been delegated to the CEO as set out Yara Integrated Report 2020 in the Rules of Procedure for the CEO of Yara Inter- shareholders and material business contracts and Yara’s Board of Directors in national ASA approved by the Board of Directors in do not have specific assignments for the company in 2020 accordance with PLC § 6-13 (2). addition to their duties as Board members. The same is
01 THIS IS YARA Until the Annual General Meeting 7 May 2020 valid for the employee representative Board members, the Yara Board of Directors consisted of seven Pursuant to Yara’s Articles of Association §6 the com- other than their employment contracts. Members of 02 YEAR IN REVIEW shareholder-elected members and four employee- pany’s Board of Directors shall be composed of 3 to the Executive Management are prohibited from being elected members. Five of the shareholder-elected 11 members. The current Board of Directors consists members of the Board. All Board members are encour- 03 FROM THE BOARDROOM Board members were re-elected at the Annual of ten members. Six of these are shareholder-elected aged to own shares in the company. General Meeting 2020 (Trond Berger, Kimberly Board members (including the Chair) all elected by the Corporate governance Lein-Mathisen, Håkon Reistad Fure, Adele Bugge Norman Pran and John Thuestad), while Annual General Meeting for two-year terms based on 9. The work of the Board of Directors Group Executive Board two shareholder-elected Board members left the Nomination Committee’s nomination. The remain- The Board has established written instructions for its Board of Directors the Board (Hilde Bakken and Geir Isaksen) and ing four Board members are elected by the employees own work. These instructions are set out in the Rules one new shareholder elected Board member was Board message in a separate process pursuant to PLC §§ 6-4 (3) and of Procedure for the Board of Yara International ASA. appointed (Birgitte Ringstad Vartdal). Risk management 6-5. In accordance with PLC § 6-35 (2) Yara and its The Board has also established an Annual Cycle which In a separate process among Yara’s employees, employees have agreed not to have a corporate assem- sets out all planned meeting dates, regular Board agen- the employees elected Rune Bratteberg, 04 FINANCIAL STATEMENTS bly, and the company is then required to include four da items and procedures for Board document prepara- Ragnhild Flesland Høimyr, Øystein Kostøl and employee elected members in the Board. Yara believes tions. The Board Procedure and Annual Cycle are Geir O. Sundbø as employee-elected Board members. this solution with employee elected board members both evaluated by the Board on an annual basis. instead of a corporate assembly supports more direct By the end of 2020 the Board members held the communication between shareholders and manage- The CEO reports monthly to the Board on operation- following shareholding in Yara International ASA: ment, increases accountability, and improves the speed al and financial developments and results, as well as and quality of the company’s decision-making. other material company and industry developments, Shareholder-elected Board members: Trond Berger: 3,000 Three (50%) of the shareholder-elected and one (25%) including but not limited to sustainability topics. Kimberly Lein-Mathisen: 500 of the employee-elected Board members are women. Håkon Reistad Fure: 22,500 The Board’s gender composition is in accordance with Pursuant to Yara’s Rules of Procedure for the Board Adele Bugge Norman Pran: 2,010 the mandatory requirements set out in PLC § 6-11a. and Yara’s Code of Conduct, all Board members John Thuestad: 1,200 and members of Yara’s management are committed Birgitte Ringstad Vartdal: 2,500 The Board elects both its Chair and Deputy Chair to make the company aware of any material interest Employee-elected Board members: among the Board members based on a recommendation they may have in items to be considered by the Board. Rune Bratteberg: 367 from the company’s Nomination Committee. The Board Neither a Board member nor the company CEO may Ragnhild Flesland Høimyr: 126 also appoints and dismisses, if applicable, the CEO of participate in Board discussions or decisions of mat- Øystein Kostøl: 208 the company and determines the CEO’s remuneration. ters that are of such particular significance for him or Geir Sundbø: 339 her, or for any close associate of him or her, that the
81 The shareholder-elected members of the Board are member must be deemed to have a special or promi- independent of the company’s management, main nent personal or financial interest in the matter. If the Yara Integrated Report 2020 Chair is or has been personally involved in matters of proposes guidelines for executive remuneration and The BASC conducts an annual evaluation according to material significance to the company, any Board review material employment matters, and advises the CEO its mandate. The committee consists of three members of such matters will be chaired by another member of on other HR matters. The HR Committee consists of the Board and the committee has the independence 01 THIS IS YARA the Board. In the case of the Chair’s absence, Board of three members elected by the Board from its own and competence required by legislation. The Chair of meetings will be chaired by the Deputy Chair. members. The committee held six meetings in 2020. the Board is not a member of BASC. 02 YEAR IN REVIEW All members attended all six meetings in 2020. The Board of Directors has established an Audit and 10. Risk management and internal control 03 FROM THE BOARDROOM Sustainability Committee and an HR Committee. Both Board Audit and Sustainability Committee Yara’s risk management and internal control activities are committees work as preparatory bodies for the Board and The Board Audit and Sustainability Committee (BASC) integrated with the corporate strategy and business plan- Corporate governance according to specific mandates approved by the Board. assists the Board of Directors in supervision of the ning processes, based on the principle that risk evaluation Group Executive Board integrity of the Company’s accounts, the process for is an integral part of all business activities. While risk Board of Directors The Board of Directors conducts an annual evalua- financial and sustainability reporting and the internal management is a centrally governed process, the responsi- Board message tion of its qualifications, experience and performance, control related to financial and sustainability reporting bility for day-to-day risk management activities is placed Risk management which is also presented to the Nomination Committee. and risk management and performance of the external with the operating segments and corporate functions. The auditor. The BASC further evaluates the performance Yara Board of Directors and Executive Management eval- HR Committee 04 FINANCIAL STATEMENTS of the internal audit function related to areas within the uate and define yearly risk appetite across key strategic, The HR Committee reviews the performance of, and mandate of BASC, ensuring sustainability governance financial, operational, compliance and HESQ dimensions proposes terms and compensation for, the CEO to the processes provide an understanding of the company’s dimensions. The main objective for a more systematic Board of Directors. The committee also reviews and significant stakeholders and materiality. and comprehensive assessment of risk appetite is to align
Board activities in 2020 Høimyr and Øystein Kostøl did not join the Board until after the In all Board meetings the CEO provides a thorough report on Annual General Meeting in May 2020. the company’s operational and financial developments and Yara’s Board of Directors convened 12 times during 2020. Nine results, and other material company and industry develop- of the meetings were ordinary Board meetings and three of The Board’s Annual Cycle sets out a list of regular Board agenda ments. Since April 2020 the Board has also received bi-weekly the meetings were extraordinary Board meetings. The ordinary items which are discussed and/or approved by the Board at updates on the Covid-19 situation for the company. Other key Board meetings were run for approximately 5.5 hours save least annually. These items include the company’s business Board agenda items in 2020 include the Board’s approval and for a shorter audio meeting in July, and a full-day meeting (9 plan, strategy and financial targets, dividend proposal, annual follow-up of the company’s reorganization from a segment hours) in December. The extraordinary Board meetings were and mid-year reports from Yara Ethics and Compliance, Yara structure to a regional structure effective 1 June 2020, and shorter meetings conducted either as a physical meeting or a Internal Risk and Audit and Yara Health, Environmental, Safety the divestment of Yara’s interests in Qafco and Lifeco. During conference call. and Quality, CEO remuneration and targets, succession plan- 2020, several external speakers have also joined the Board ning, corporate governance review and approval, governance meetings to present relevant topics to the Board. All Board members attended all Board meetings, however documents review and approval, approval of the company’s shareholder-elected Board member Birgitte Ringstad Vartdal Integrated Report and General Meeting papers, and Board A Board visit to one or more of Yara’s sites and/or projects is and employee-elected Board members Ragnhild Flesland self-evaluation. usually conducted each year, but due to Covid-19 it has not 82 been possible to arrange for such a visit in 2020. Yara Integrated Report 2020 boundaries for risk which will guide efficient resource allo- on Yara internal control related to the Financial Reporting BASC activities in 2020 cation. Defining risk appetite is also a prerequisite for setting process. The Board Audit and Sustainability Committee optimal risk tolerance with supporting controls. 01 THIS IS YARA (BASC) met 11 times in 2020, of which six ordi- Yara’s internal control framework is based on the prin- nary meetings and five extraordinary meetings. The Board believes that expressing the company’s risk ap- ciples of the integrated framework for internal control 02 YEAR IN REVIEW petite within important areas of its business activity helps established by the Committee of Sponsoring Organizations Håkon Fure was elected for the committee at the Annual General Meeting in May. All BASC to convey how the company approaches and evaluates risk of the Treadway Commission (COSO). 03 FROM THE BOARDROOM members attended all BASC meetings. to investors, customers and society at large. The five framework components are: Corporate governance The BASC, previously Audit Committee, changed The Board carries out separate annual reviews of the com- • control environment Group Executive Board its name and mandate in early 2020, in line pany’s most important risk exposures and internal control • risk assessment Board of Directors with YARA’s continuing focus on sustainability performance and related risks and controls. The systems. Risks are also considered by the Board in relation to • control activities Board message extraordinary meetings in 2020 were dedicated the assessment of specific projects and ongoing operations. • information and communication Risk management to the sustainability agenda, including Yara’s • and monitoring. ESG seminar and sessions focusing on strength- The BASC performs ongoing evaluations of risk and control ening Yara’s sustainability governance structure. related to financial reporting. Yara Internal Risk and Audit The content of the different elements are described below. 04 FINANCIAL STATEMENTS Agenda items included sustainable business model development, findings from sustainability supports Yara Management and the Board of Directors in analyses provided by third parties and strategic terms of evaluating the effectiveness and efficiency of internal Control environment responses, matters relating to EU Taxonomy controls and gives an independent view on risk management. Yara’s Corporate Social Responsibility policy and Code thresholds, as well as Yara’s ESG benchmark of Conduct are integrated in its risk management and scores in the Carbon Disclosure Project, Yara Internal Risk and Audit performs independent audits internal control systems, through global employee training Ecovadis, Sustainalytics and MSCI. both at subsidiary and group level, as well as audits and re- programs, and an Integrity Due Diligence process which In line with the BASC annual cycle, the ordinary views of specialist functions involved in business operations, covers both existing business partners and forward-looking meetings covered matters relating to the annual financial reporting and risk management. The Chief Audit business development activities. business plan, strategy and risk management, Executive reports functionally to the Board of Directors accounting, financial and non-financial reporting, including status on ICFR, tax, finance and trea- and administratively to the Chief Executive Officer. Yara Yara’s Steering System is one of the pillars of Yara’s inter- sury, improvement programs, compliance and Internal Risk and Audit has no direct operational responsi- nal control system. It aims to ensure that all Yara employ- ethics, legal proceedings, YIRA (Yara Internal bility or authority over any of the activities it reviews. The ees act in a consistent manner and in line with quality Risk and Audit) audit plan and reporting, IT and unit has unrestricted access to all functions, records, phys- standards and business needs. All Yara employees are cyber security and other compliance-related ical properties, and personnel relevant to the performance encouraged to raise questions or issues about such matters matters. The BASC has also met with the external auditor as part of the annual cycle, of its tasks. It also has full and free access to Yara Executive with line management and through alternative channels, including approval of services, as well as separate Management, the Board of Directors and the BASC. including a whistle-blowing system. executive meetings with the CEO and CFO. Risk assessment 83 The external auditor provides a description of the main elements in the audit to the BASC, including observations The Enterprise Risk Management unit is the key facilitator Yara Integrated Report 2020 of the internal risk management system and shall assist an overview of the prevailing corporate policies and to the Annual General Meeting, increasing to NOK Executive Management with implementing and main- procedures. Yara’s Accounting Manual describes cor- 30,000 per meeting after the Annual General Meeting. taining an appropriate risk management framework porate accounting policies and is continuously updated 01 THIS IS YARA to support identification, analysis, management and and revised for any changes related to IFRS and Yara’s The remuneration to the Chair of the BASC was NOK reporting of all types of risk. The unit further coor- Accounting Policies. 174,000 per annum prior to the Annual General Meet- 02 YEAR IN REVIEW dinates risk management activities within Yara and ing, increasing to NOK 180,000 per annum thereafter. consolidates reporting on risks. Monitoring The remuneration to the other BASC members was 03 FROM THE BOARDROOM All bodies and functions described above monitor NOK 98,000 per annum prior to the Annual General Control activities and assess for any need of corrective actions related Meeting and NOK 101,000 per annum thereafter. Corporate governance Yara’s Group Accounting is responsible for the prepa- to financial and operational risk within their area of Group Executive Board ration of the Financial Statement and to ensure that the responsibility. The remuneration to the Chair of the HR Committee Board of Directors Financial Statement is reported according to applicable was NOK 7,900 per meeting prior to the Annual Gener- Board message laws and regulations and in accordance with adopted 11. Remuneration of the Board of Directors al Meeting, and NOK 90,000 per annum thereafter. The Risk management accounting policies. The remuneration of the Board of Directors is pro- remuneration to the other HR Committee members was posed by the Nomination Committee and approved by NOK 7,500 per meeting prior to the Annual General 04 FINANCIAL STATEMENTS The Controller function is responsible for the Board of the Annual General Meeting, and is not linked to the Meeting and NOK 70,000 per annum thereafter. Directors and Management reporting as well as plan- company’s performance. Shareholder elected Board ning and coordinating the business plan process. members are not granted share options. The total compensation to Board members in 2020 is dis- closed in Note 8.1 in the consolidated financial statements. The Internal Control function regulates the governance The remuneration of the Board of Directors reflects the structure for Internal Control over Financial Reporting Board’s responsibility, expertise, time commitment and 12. Remuneration of executive personnel (ICFR) as well as manages and controls risks related to the complexity of the company’s activities. 2021 Guidelines for remuneration of Group Executive financial reporting. Board and Board Members in Yara In 2020, the remuneration to the Chair of the Board of Yara’s guidelines for remuneration of Group Executive The BASC performs reviews of the quarterly and an- Directors was NOK 646,000 per annum prior to the Board and Board members is prepared in accordance nual financial statements with special focus on trans- Annual General Meeting, increasing to NOK 669,000 with the Public Limited Companies Act section 6-16a. action types, which includes judgments, estimates or per annum thereafter. The remuneration to the Vice Pursuant to the Public Limited Companies Act section issues with major impact on the Financial Statement. Chair was NOK 386,000 per annum prior to the 6-16a (5) the statement will be presented to the Annual The internal and external auditors participate in these Annual General Meeting, increasing to NOK 400,000 General Meeting (AGM) 2021 for approval. The Minis- meetings. In addition to the quarterly and annual per annum after the Annual General Meeting. The try of Trade, Industry and Fisheries disclosed amended reporting, the Board of Directors receives pre-quarterly remuneration to the other Board members was NOK guidelines for remuneration of executives in state-owned performance reports. 340,000 per annum prior to the Annual General Meet- and partly state-owned companies with effect from 13 ing and NOK 352,000 per annum thereafter. Board February 2015 (State guidelines). Yara’s remuneration Information and communication 84 members resident outside Scandinavia was entitled to a principles applying to Yara CEO and the other members The Yara Steering System provides all employees with meeting allowance of NOK 23,000 per meeting prior of the Group Executive Board comply with these guide- Yara Integrated Report 2020 lines. Potential deviations will be reported in the report the President and CEO (CEO) and approves the general plans for the Group Executive Board are moderate and on remuneration of Group Executive Board and Board terms of the company’s incentive plans for the Group in accordance with the State Guidelines for all members Members to the Annual General Meeting. The first report Executive Board based on proposals from the HR Com- of the Group Executive Board that have joined after 01 THIS IS YARA on remuneration will be reported at the Annual Gener- mittee The CEO determines the remuneration to the other 3 December 2015 as further described below in the al Meeting 2022.For members of the Group Executive members of the Group Executive Board. section Company paid Pension Plans. 02 YEAR IN REVIEW Board employed by Yara companies in other countries remuneration may deviate from the State guidelines Deviation from the guidelines The total remuneration for the members of the Group 03 FROM THE BOARDROOM depending on local market conditions. There is currently The Board of Directors may decide to deviate entirely Executive Board comprises the following elements, that one member of Yara’s Group Executive Board who is or partly from the guidelines temporarily in individual will be explained in detail Corporate governance employed by a non-Norwegian Yara company. cases provided that it has been regarded to be excep- • Base salary Group Executive Board tional circumstances that make it necessary to deviate • Share Based Remuneration Board of Directors Guidelines for remuneration of Board Members from the guidelines in order to safeguard the company’s • Short-Term incentive plan Board message The Chair and other Board members receive remuneration long - term interest, financial sustainability or ensure • Pension plan benefits Risk management as Board members and members of Board Committees. the company’s viability. Potential deviations and the • Other compensation elements such as internet con- The remuneration is determined by the General Meeting reason for this will be reported in the report on remu- nection and company car 04 FINANCIAL STATEMENTS on the basis of recommendation from the Nomination neration of Group Executive Board and Board Mem- Committee. Employee-elected Board members receive the bers to the Annual General Meeting. Base salary same remuneration as shareholder-elected Board mem- Base Salary is reviewed once a year as per 1st June as bers. None of the shareholder elected Board members are General principles part of the Annual Salary Review for all employees in employed by the Company. The Board determines the total remuneration to the CEO Yara. In addition, salaries may be reviewed if scope of and other members of the Group Executive Board on the responsibility is materially changed. The development None of the employee-elected Board members are execu- basis of; of basic salary for Executive Management is based on tives. The employee-elected Board members receive salary, • A commitment to exercise moderation through re- the following: pension and other remuneration such as bonuses, share- sponsible and not market leading remuneration; • Annual salary adjustment for employees in Yara based remuneration, car allowance, etc. in accordance • Incentivize management in line with maximizing International ASA and Norwegian subsidiaries with the Company’s general terms for employment. long-term sustainable value creation to Yara’s share- • Benchmark of Executive Management Salaries in holders and other stakeholders; peer companies The Chair and other members of the Board have no agree- • The need to offer competitive terms to secure the ments for compensation in the event of termination or company’s competitiveness in the labor market Yara CEO and the other members of the Group Execu- changes in their positions as Board members. tive Board voluntarily abstained from the annual salary Total remuneration for each member of the Group adjustment in both 2019 and 2020. The Group Execu- Guidelines for remuneration of Executive Board, including all compensation elements, tive Board will for the third year running abstain from Group Executive Board value of pension plan benefits and other benefits is com- the annual salary adjustment as per 1st June 2021.
85 The Board of Directors determines the remuneration of pared to the relevant market on a regular basis. Pension Yara Integrated Report 2020 Share Based Remuneration (SBR) Executive Board that participate in the SBR program, If all stretched goals have been met and the planned To support the alignment between executives and share- every year as a minimum - in addition to the shares actions have been taken during the year and with the holder interests and to ensure retention of key talent received as part of the SBR - invest in Yara shares an desired result, this will give a Short-Term Incentive 01 THIS IS YARA in the company, an amount equal to 30% of the base amount equaling the lowest amount received as net, after pay-out of 40% of the annual Base Salary for Yara salary for the CEO and 25% of the base salary for the tax Short-Term Incentive payout for the preceding year CEO and 35% for the other members of the Group 02 YEAR IN REVIEW other members of the Group Executive Board may be or the net amount received as SBR for the relevant year. Executive Board. The total pay-out cannot exceed awarded by the Board on an annual basis. The net after Such investments should be made until the shareholding 50% of the annual Base Salary. 03 FROM THE BOARDROOM tax amount must be invested in Yara shares within a amounts to two times the gross remuneration package, period of one month after the grant and the shares must including pensions. Furthermore, it is also expected that In cases where members of the Group Executive Board Corporate governance be retained for minimum 3 years. Executives who resign members of the Group Executive Board do not sell any are recruited in other countries than Norway the per- Group Executive Board from Yara must reimburse to the company at the time of Yara shares as long as they are members of the Group centages may deviate from what is mentioned above Board of Directors resignation the net proceeds of the selling of the shares Executive Board. depending on local market conditions for remunera- Board message that are still within the lock-in period. tion. Risk management Short-term Incentive plan The grant of SBR is conditional on Yara’s Net Result To secure that the Short-Term Incentive Plan contributes Company performance 04 FINANCIAL STATEMENTS excluding special items and currency gain/loss being to realizing Yara’s strategy, its long-term value creation The table below shows the relation between Yara’s positive over the last three years. Yara’s CEO can on a and capital allocation policy, the Short-Term Incentive long-term strategic targets and the Performance Indi- discretionary basis decide that SBR shall not be granted Plan is based on Yara’s strategic targets as presented at cators set to drive performance for 2021. for a given year and Yara’s Board of Directors can decide Yara’s ESG Investor Seminar 7 December 2020, covering that SBR shall not be granted to the CEO for a given the dimensions of People, Planet and Prosperity. Method of measurement for Company Performance: year. Such an assessment will amongst other factors The assessment of the performance score is based on be evaluated against Yara’s performance towards its The Short-Term Incentive Plan can have an outcome for a scale for each Indicator, where each Indicator may strategic targets of sustainable value creation, hereunder the individual executive of 0% to 50% of base salary and result in an outcome between 0% of base salary, a Performance Indicators linked to People, Planet and is calculated as presented in the following paragraphs. target of 24% of base salary for the CEO and 21% for Prosperity. the other members of the Group Executive Board, and Company performance a maximum of 30% of base salary. The weighted sum In cases where members of the Group Executive Board (From 0% to 30% of Base Salary) in line with the stra- of the outcome of the factors represents the overall are recruited in other countries than Norway the SBR tegic targets released at Yara’s ESG Investor Seminar 7 outcome as a percentage of base salary. percentage may deviate from what is mentioned above December 2020 (goals included below) depending on local market conditions for remuneration. For commercial, competitive and general business Progress on strategic focus areas reasons, the concrete target values of each individual In order to support alignment between members of the (From 0% to 20% of Base Salary) in line with the stra- Indicator are not disclosed as part of this statement. Group Executive Board and the shareholder interests tegic targets released at Yara’s ESG Investor Seminar 7
86 it is furthermore expected that members of the Group December 2020 (goals included below) Yara Integrated Report 2020 Strategic focus areas Ambition for 2025 Performance indicators 2021 The following list of factors are set to drive performance
People People (25% of total company performance) for 2021: 01 THIS IS YARA • No fatalities and TRI<1.0 • TRI rate development • Scale the Farming Solutions organization • Process safety (PSI) • Strategically develop Yara Clean Ammonia • Top quartile engagement index score 02 YEAR IN REVIEW • Engagement index • Improve plant reliability toolbox • Top quartile Diversity & Inclusion Index score • Diversity & Inclusion Index • Strengthen change management and dynamic upskilling 03 FROM THE BOARDROOM • >35% female leaders in senior management • Share of female senior leaders positions • Female/male external recruitment senior personnel Method of measurement for Strategic Focus Areas: Corporate governance The assessment of the performance score is based on a scale for Group Executive Board Planet Planet (25% of total company performance) each factor, where each factor may result in an outcome between Board of Directors • 150 million hectares under management • Active hectares under management 0% of base salary, a target of 16% of base salary for the CEO • Greenhouse gas emissions intensity Board message • 10% lower GHG emissions in kg CO2e/kg N and 14% for the other members of the Group Executive Board, • Energy efficiency Risk management produced and a maximum of 20% of base salary. The weighted sum of • Launching carbon marketplace the outcome of the factors represent the overall outcome as a • 30% absolute reduction in Scope 1 and 2 04 FINANCIAL STATEMENTS percentage of base salary. by 2030
For commercial, competitive and general business reasons, the Prosperity Prosperity and capital discipline concrete target values and weight of each individual factor are (50% of total company performance) • 300-600 MUSD incremental EBITDA from not disclosed as part of this statement. new business models • Ammonia production volume • Finished fertilizer production volume - USD 1.5 billion revenues from • Premium generated In the Board’s total short-term incentive plan performance new business models • Revenues from new business models evaluation, in addition to the performance towards the factors - USD 1.2 billion revenues from online sales • Revenues from online sales described above, the Board will put weight on how difficult it • Delivering on YIP 2.0 by 2023: • EBITDA has been to achieve the results, changes in external non-control- - Increased production: 1.3 mt ammonia and • Fixed costs 2.8 mt finished products • Working capital days lable factors that were not anticipated at the beginning of the • ROIC - Fixed cost flat at 2.34 BUSD, working capital year and that the results have been achieved in accordance with • Capital expenditure reduced to 92 days Yara’s values and ethical principles. • Progress projects on planned time/cost • ROIC > 10% mid cycle • MSCI rating • Premium products: volume and commercial • Net debt / EBITDA Claw back of share based remuneration margin growth and short-term Incentive payments Shares provided by the SBR and payments that have already been made from the Short- Term Incentive Plan are subject to
87 claw back provisions covering both situations of misconduct and Yara Integrated Report 2020 errors leading to financial re-statement. Enforcement 50. A DC pension plan was established to compensate erance pay is calculated from the end of the notice of the provision will be subject to local law. members for the shortfall. Executives who were previ- period. Other income the executive receives during ously members of other Defined Benefit Pension Plans the severance pay period will be deducted from the 01 THIS IS YARA Benefit Plans being terminated or converted to DC plans might have severance pay. For members of the Group Executive Company paid pension plans cash allowances to compensate for the shortfall. Board employed by Yara companies in other countries 02 YEAR IN REVIEW Pension Plans in Yara should be defined contribution severance pay may deviate from the above depending (“DC”) plans. Executive Management on Norwegian Executives employed by Yara companies in other coun- on local regulations. 03 FROM THE BOARDROOM employment contracts are eligible to the company paid tries will be covered by company paid pension plans DC Pension Plan applicable for all Yara employees in according to national plans and markets. Voluntary share purchase program Corporate governance Norway. The contribution rates to this plan is 7% of Group Executive Board members employed in Norway Group Executive Board part of pensionable salary up to 7.1 times Norwegian Personal Insurance schemes can take part in the annual offer to all permanent Yara Board of Directors Social Security Base Amount (G) and 18% of pension- The executives are members of the personal insurance employees in Norway where they can buy Yara shares Board message able salary between 7.1G and 12G. schemes applicable to other Yara employees. These with a tax-exempt discount being within a thresh- Risk management are Group Life Insurance, Disability Pension, lump- old set by the Norwegian authorities. Yara offers the Yara has a DC Pension Plan covering salary in excess sum payment in the event of disability, occupational employees an interest-free loan with repayment of one 04 FINANCIAL STATEMENTS of 12G applicable for employees on Norwegian em- diseases, occupational and non-occupational accident year for the purchase of the shares. This plan comes in ployment contracts. From December 2015 this plan and Health Insurance. In addition, they are provided addition to the SBR. was closed for new members. For internal recruits to with a Travel Insurance covering both the executive the Executive Management who are members of the and family. Ad-hoc compensation elements plan at commencement, future contributions to the In extraordinary circumstances related to recruitment plan stops and they become deferred members of the Other compensation elements processes, sign-on bonus may be agreed. Any such plan. Current members of the Executive Management Executives are granted benefits in kind according to compensation will be reported in the report on remu- at 3 December 2015 remain active members of the plan the applicable market standard. These are typically cell neration of Group Executive Board and Board Mem- with future contributions. phone, internet connection and company car, alterna- bers to the Annual General Meeting. tively fixed car allowance. For employees on Norwegian employment contracts, 13. Information and communications the upper retirement age is 70 years with the possibil- In the event of an international assignment contract, Communication with financial markets is based on the ity for flexible retirement from age 62 in the company the executive and family will be entitled to allowances principles of openness and equal treatment of all share- paid DC plans. Yara has a defined benefit early retire- and benefits in accordance with Yara’s Global Mobil- holders. Yara shall provide the public with accurate, ment plan for executives on Norwegian employment ity Policy. comprehensive and timely information, to form a good contracts covering the period from age 65 to 67 with basis for making decisions related to valuation and a defined benefit equal to 65% of final salary limited Members of Group Executive Board on Norwegian trade of the Yara share. The aim of providing such in- to 12G. From 1st January 2015, the plan was closed contracts are entitled to a severance pay equal to six formation is to reduce investors’ risk and the volatility
88 for new members and ceased for employees below age months basic salary on certain conditions. The sev- of the Yara share, contributing to a pricing of the Yara Yara Integrated Report 2020 share that reflects the company’s underlying values and Yara publishes quarterly financial results according to 15.Auditor future prospects. its financial calendar which is published annually on its The external auditor shall provide a description to the web pages and to the Oslo Stock Exchange. Ahead of BASC of the main elements of the audit of the preced- 01 THIS IS YARA Yara’s main communication channels are stock ex- announcement of quarterly results, Yara has a “closed ing financial year, including any uncovered material change releases, press releases and its own web pages period” when contact with external analysts, investors weaknesses related to internal controls of the financial 02 YEAR IN REVIEW (www.yara.com) in order to secure that the same infor- and journalists is minimized. Yara will not comment reporting process. mation is made available to all audiences simultaneous- upon own activities or market developments during The external auditor shall also: 03 FROM THE BOARDROOM ly. Although Yara holds regular meetings for analysts, this period, to minimize the risk of unequal informa- • Annually confirm its independence investors, journalists and employees, all material new tion in the marketplace. The closed periods are from • Disclose any services besides the statutory audit Corporate governance information is first published to the stock exchange 16 January until the fourth-quarter results publication, services which have been provided to the company Group Executive Board and Yara’s web pages. Yara will provide a consistent from 1 April until the first-quarter results publication, during the financial year Board of Directors level of information regardless of whether the news is from 1 July until the second-quarter results publica- • Disclose any threats to its independence and docu- Board message positive or negative. tion and from 1 October until the third-quarter results ment measures taken to mitigate such threats. Risk management publication. Yara does not provide guidance on financial results. The use of the external group auditor for advisory 04 FINANCIAL STATEMENTS However, Yara may communicate guidance and/or Yara shall comply with relevant regulations for compa- services, tax services and other services outside the or- targets for discrete activity areas. In addition, Yara nies listed on the Oslo Stock Exchange. dinary audit scope shall be pre-approved by the BASC. provides sensitivities that can be used to calculate the Within defined limits, the CFO and the VP Accounting financial effects of changes in market prices and cur- 14. Take-overs & Tax have been delegated authority to pre-approve rency exchange rates. The Board of Directors will not seek to hinder or ob- services. The external group auditor is responsible for struct takeover bids. In the event of a takeover bid for reporting such services to the BASC and to perform an Yara spokespersons to financial markets (investors, the company, the Board will seek to comply with the ongoing assessment of independence. Norwegian laws analysts and financial media) are the Chief Executive Code recommendations, obtaining a valuation from and regulations stipulate the type of non-audit services Officer, the Chief Financial Officer, SVP Investor an independent expert and making a recommendation that external auditors can perform for Yara. Relations, VP Corporate Communications and In- to Yara’s shareholders regarding acceptance of the vestor Relations Officer(s) or others authorized by bid. The Board will ensure that shareholders are given The external auditor participates in the BASC meet- these. Questions from investors and financial analysts sufficient information and time to form an opinion on ings that approve financial statements. In addition, the to other Yara personnel shall be referred to Investor an offer. external auditor meets with the Board at least once per Relations. All meetings with investors and financial year to review the company’s internal control proce- analysts shall be arranged/coordinated by Investor Re- The Norwegian Securities Act regulates takeover dures, potential weaknesses identified and proposals lations, and presentation materials for such meetings attempts. Shareholders at the Annual General Meeting for improvement. The external auditor and the Board shall be prepared or approved by Investor Relations. will, according to law, make the decision on any poten- meet at least once a year without Yara Executive Man- Investor Relations shall normally accompany Yara tial takeover bids. agement being present.
89 managers in investor/analyst meetings. Yara Integrated Report 2020 FROM THE BOARDROOM Group executive board 01 THIS IS YARA
02 YEAR IN REVIEW Read more about 03 FROM THE BOARDROOM our mangement Corporate governance team by clicking Group Executive Board on their pictures or names. You can also Board of Directors continue reading on Board message the following pages. Risk management
04 FINANCIAL STATEMENTS
Svein Tore Holsether Tove Andersen Pablo Barrera Lopez Pål Hestad
Terje Knutsen Fernanda Lopes Larsen Chrystel Monthean Kristine Ryssdal Lars Røsæg 90 Yara Integrated Report 2020 Back to the overview
Svein Tore Holsether (1972) Tove Andersen (1970) Pablo Barrera Lopez (1985) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT President and 2015 E V P, Europe 2020 EVP, Yara Communications 2020 & Procurement 03 FROM THE BOARDROOM Chief Executive Officer
Corporate governance EMPLOYED EMPLOYED EMPLOYED Group Executive Board 2015 1997 2014 Board of Directors EDUCATION EDUCATION EDUCATION Board message Bachelor’s degree, specializing in Finance & Management from Master’s degree in Business Administration from BI Norwegian Master´s degree in Finance from the Norwegian School of Eco- the University of Utah, USA Business School and a Master’s degree in physics and nomics and Business Administration (NHH). Risk management mathematics from the Norwegian University of Science and Technology (NTNU). EXPERIENCE EXPERIENCE 04 FINANCIAL STATEMENTS Mr. Holsether is passionate about promoting the Sustainable Mr. Barrera has served as Executive Vice President Development Goals in the global business arena. To contribute EXPERIENCE Communications & Procurement since January 2021. His to a thriving future and drive inclusive growth, he is a member Ms. Andersen has served as Executive Vice President Europe previous positions in the company include: EVP Strategy & of the Executive Committee and Chair of the Food & Nature since June 2020. Ms. Andersen has previously held several Communications 2020, EVP Supply Chain 2018-2020, Country program for the World Business Council for Sustainable positions in the company, including EVP Production 2018-2020, Manager Yara Chile 2017-2018. Prior to joining Yara, Mr. Barrera Development (WBCSD). He was a Commissioner of the EVP Supply Chain 2016-2018, and VP Supply Chain Europe worked at The Boston Consulting Group between 2009-2014. Business and Sustainable Development Commission (BSDC), 2014-2016. Since being employed by Hydro as a trainee in Mr. Barrere is passionate about promoting the sustainability and also serves on the Executive Committee and Board of 1997, she has held several positions throughout the compa- agenda and has completed the leadership program from World the International Fertilizer Association (IFA). Previously, Mr. ny, Including VP Marketing and New Business 2011-2013 and Business Council for Sustainable Development and the Creating Holsether has held a range of executive and senior position in Country Manager Yara UK/ Ireland 2006-2011. Sustainability Shared Value class from Harvad Business School. large industrial companies, including in Orkla, Sapa and Elkem. has been an integral part of her leadership agenda, and as EVP Production, Ms. Andersen had the global responsibility for Yara’s SHARES OWNED AT YEAR-END 2020 7,0 6 1 SHARES OWNED AT YEAR-END 2020 40,373 decarbonization activities.
SHARES OWNED AT YEAR-END 2020 12,723
91 Yara Integrated Report 2020 Back to the overview
Pål Hestad (1971) Terje Knutsen (1962) Fernanda Lopes Larsen (1974) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT EVP, Global Plants & 2020 EVP, Farming Solutions 2020 EVP, Africa & Asia 2020 03 FROM THE BOARDROOM Operational Excellence
Corporate governance EMPLOYED EMPLOYED EMPLOYED Group Executive Board 1995 1987 2012 Board of Directors EDUCATION EDUCATION EDUCATION Board message Master’s degree in Industrial Electrochemistry from Norwegian Master’s degree (Siviløkonom) from the Norwegian School of Master’s degree in Civil Engineering from Graz University of University of Science and Technology (NTNU) Economics (NHH) in Bergen, Norway Technology, Austria and a specialization in Corporate Innovation Risk management from Stanford University, United States EXPERIENCE EXPERIENCE 04 FINANCIAL STATEMENTS Mr. Hestad has served as Executive Vice President Global Terje Knutsen has been EVP Farming Solutions since June EXPERIENCE Plants & Operational Excellence since June 2020. He has been 2020. His previous positions in the company include EVP, Ms. Lopes Larsen has served as EVP Africa & Asia since a Yara employee since 1995. Since then, Mr. Hestad has held Sales and Marketing 2018-2020, EVP Crop Nutrition 2015-18. September 2020. She joined Yara in 2012 and has since held several positions at Yara’s Glomfjord plant (Process Engineer, In addition, he has held a number of financial controller, several senior positions in the Company, the most recent being Operations Engineer, Productivity Engineer, Production Manager commercial and management positions since joining the Senior Vice President for Indirect Procurement (2016-2020). and Plant Manager). He has also held the positions of Head of company in 1987 as a trainee. Mr. Knutsen has spent the Prior to joining Yara, Ms. Lopes Larsen held manufacturing and Productivity (2003-2004), Regional Plant Manager, Germany past three years leading the development of Yara’s emerging procurement positions in consumer goods and pharmaceutical (2010-2012), Regional Head of Production (2012-2018), and sustainable food business, guiding the integration of digital companies Procter & Gamble and GlaxoSmithKline. Senior Vice President Production, Northern Europe & Canada farming solutions into the precision crop nutrition practice and (2018-2020). overseeing the launch of Yara’s Agoro Carbon Marketplace and SHARES OWNED AT YEAR-END 2020 1,955 Clean Ammonia units. SHARES OWNED AT YEAR-END 2020 5,634 SHARES OWNED AT YEAR-END 2020 12,807
92 Yara Integrated Report 2020 Back to the overview
Chrystel Monthean (1967) Kristine Ryssdal (1960) Lars Røsæg (1982) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT POSITION YEAR OF APPOINTMENT E V P, A mericas 2020 EVP, HR & General Counsel 2020 EVP, Chief Financial Officer 2018 03 FROM THE BOARDROOM
Corporate governance EMPLOYED EMPLOYED EMPLOYED Group Executive Board 1991 2016 2017 Board of Directors EDUCATION EDUCATION EDUCATION Board message Post-graduate degree in agronomy engineering from Ecole Master of Laws degree from the London School of Economics, in Degree (“Siviløkonom”) from the Norwegian School of Nationale Ingenieurs Techniques Horticulture et Paysage, addition to a Law degree from the University of Oslo Economics (NHH), a four-year programme in economics and Risk management France and a Master’s in International Business and business administration Technology Transfer from Rouen Business School, France. EXPERIENCE 04 FINANCIAL STATEMENTS Ms. Ryssdal has served as EVP, HR & General Counsel since EXPERIENCE EXPERIENCE June 2020. Previously, she held the position of EVP General Mr. Røsæg has served as Chief Financial Officer since November Ms. Monthean has served as EVP Americas since October Councel 2016-2020. Before joining Yara, Ms. Ryssdal held the 2018. Prior to that he held the position of Vice President Global 2020. She has been a Yara employee since 1991. Her previous position of Vice President Legal at Statoil 2012-2016. Prior to JVs & CEO Office. He has broad experience from senior finance positions in the company include EVP Africa & Asia (June this, Ryssdal was Senior Vice President and Chief Legal Officer and strategy positions at Sapa (2012-2017) and Orkla (2005- 2020), Manager, BU Latin America (2018-2020), Value Chain of Renewable Energy Corporation ASA 2008-2012, Senior Ad- 2012). Røsæg is a certified Diversity Manager in line with the Director (2013- 2018), and Managing Director of Yara Vietnam visor Commercial & Legal Affairs at Norsk Hydro / Statoil Hydro requirements from Norsk Sertifisering AS. (2007-2013). Prior to moving to Asia and Latin America, Ms. 2006-2008, Legal Counsel at Norsk Hydro 1998-2006, and Monthean held roles in various commercial functions and Attorney at the Attorney General’s office 1987-1998. Sustain- SHARES OWNED AT YEAR-END 2020 6,254 countries in Europe. ability is an integrated part of her leadership agenda as respon- sible for Ethics & Compliance and Diversity & Inclusion in the SHARES OWNED AT YEAR-END 2020 1,899 Group Executive Board. Ryssdal is also a member of the Execu- tive Board of the Central Bank of Norway, supervising amongst others responsible investments of the Norwegian Oil Fund.
SHARES OWNED AT YEAR-END 2020 9,332
93 Yara Integrated Report 2020 FROM THE BOARDROOM Board of Directors 01 THIS IS YARA
02 YEAR IN REVIEW Read more about our Board 03 FROM THE BOARDROOM of Directors by clicking on their Corporate governance pictures or names. You can Group Executive Board also continue reading on the following pages. Board of Directors Board message Risk management
04 FINANCIAL STATEMENTS
Trond Berger Rune Bratteberg Håkon Reistad Fure Ragnhild F. Høimyr
Øystein J. Kostøl Kimberly Lein-Mathisen Adele B. Norman Pran Geir O. Sundbø John Thuestad Birgitte R. Vartdal 94 Yara Integrated Report 2020 Back to the overview
Trond Berger (1957) Rune Bratteberg (1960) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR Chair of the Board Shareholders, 2018 Member of the Board Employees, 2012 Chair of the HR Committee Member of the Audit and 03 FROM THE BOARDROOM Sustainability Committee
Corporate governance POSITION POSITION Group Executive Board CEO in Blommenholm Industrier since 2020 Head of Product Stewardship and Compliance Investment Director at Blommenholm Industrier since 2019 Board of Directors EDUCATION Board message EDUCATION Degree in Information Technology and a Degree in Nordic MA in Economics from the BI Norwegian School of Management Languages and History from University of Bergen Risk management and is a State-Authorized Public Accountant. Graduate of the Norwegian Armed Forces’ Officer Candidate School (1977) EXPERIENCE 04 FINANCIAL STATEMENTS Mr. Bratteberg has been a Yara (Hydro) employee since 1986. EXPERIENCE He has held different IT and HESQ leadership positions within Mr. Berger is CEO of Blommenholm Industrier. From 2019-2020, Hydro and Yara, from 2001 to 2009 as CIO. Bratteberg has been he was Investment director at Blommenholm Industrier. From a member of the Chemical Industry Advisory Board to SAP AG 1999 to 2019, Mr. Berger served as Executive Vice President 2004-2009, and Chairman of the Board at the Scandinavian of Schibsted ASA, includeing as CFO with responsibility for School of Brussels 2009-2011. Sustainability. Previous positions also include: Investment Director with Stormbull (1998), Executive Vice President (CFO) OTHER ASSIGNMENTS of Nycomed ASA and Executive Vice President, Strategy and Business Development at Nycomed Amersham (1997-98), BOARD MEETINGS ATTENDANCE 12 and partner at Arthur Andersen (1981-92). AUDIT & SUSTAINABILITY COMMITTEE ATTENDANCE 9 SHARES OWNED AT YEAR-END 2020 367 OTHER ASSIGNMENTS Mr. Berger is also Chair of the Board of Bertil O Steen Holding and Arctic Asset Management, as well as meber of the Board in Oslo House, Polaris Media, and Sayonara.
BOARD MEETINGS ATTENDANCE 12 HR COMMITTEE ATTENDANCE 4 AUDIT & SUSTAINABILITY COMMITTEE ATTENDANCE 3 SHARES OWNED AT YEAR-END 2020 3,000 95 Yara Integrated Report 2020 Back to the overview
Håkon Reistad Fure (1987) Ragnhild Flesland Høimyr (1987) Øystein J. Kostøl (1982) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR Member of the Board Shareholders, 2019 Member of the Board Employees, 2020 Member of the Board Employees, 2020 03 FROM THE BOARDROOM Member of the Audit and Sustainability Committee
Corporate governance POSITION POSITION POSITION Group Executive Board Chairman of Company One Production Manager CN & NPK2 at the Yara’s Porsgrunn Plant Senior Innovation Manager, Yara Climate Neutral Solutions Board of Directors EDUCATION EDUCATION EDUCATION Board message MSc in Finance from the Norwegian School of Management Master of Science degree from the University South-Eastern Master of Technology degree from NTNU (Trondheim, Norway) (Handelshøyskolen BI) Norway on Energy and Environment. Master’s Thesis on environmental Risk management Life Cycle Assessment in process industry. EXPERIENCE EXPERIENCE 04 FINANCIAL STATEMENTS In 2015 Mr .Fure joined the corporate assembly of Storebrand Ms. Høimyr has been a Yara employee since 2015, currently EXPERIENCE ASA and was subsequently elected a board member of Store- in the position of Production Manager CN & NPK2 at the Mr. Kostøl has been a Yara employee since 2012, currently in brand ASA in 2015 directly representing a group of shareholders. Porsgrunn Plant. Previously, Ms. Høimyr held the position of the position of Senior Innovation Manager in the Climate Neu- In 2016, Mr. Fure was elected to the board of Avida, where he Process Engineer NPK/CN area in Porsgrunn (2015-2019). She trality department. Mr. Kostøl is project manager for full scale also acted as CEO in 2018. In 2020 Mr. Fure joined MyBank has served as member of the Telemark University College Board electrification of the ammonia production in Porsgrunn. as the Chairman of the Board. Previous experience in Equity (2010-2012), and as Chairman of the Board of the Student Research at DNB Markets and Partner of Magni Partners. Welfare Organization in Telemark (2012-2014). The first three years working for Yara, Mr. Kostøl was based in Ethiopia, working on the Dallol mining project. Successively, he OTHER ASSIGNMENTS OTHER ASSIGNMENTS worked as project manager in different Yara mining projects Chairman of the Board of MyBank ASA until 2017 when he started in the Innovation department, focusing on climate neutral solutions. Mr. Kostøl has previously BOARD MEETINGS ATTENDANCE 8 worked in the Norwegian utility company Statkraft. He heads BOARD MEETINGS ATTENDANCE 12 SHARES OWNED AT YEAR-END 2020 126 the labor union Tekna at Yara. AUDIT & SUSTAINABILITY COMMITTEE ATTENDANCE 6 SHARES OWNED AT YEAR-END 2020 22,500 OTHER ASSIGNMENTS
BOARD MEETINGS ATTENDANCE 8 SHARES OWNED AT YEAR-END 2020 208
96 Yara Integrated Report 2020 Back to the overview
Kimberly Lein-Mathisen (1972) Adele Bugge Norman Pran (1970) Geir O. Sundbø (1963) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR Vice chair of the Board Shareholders, 2019 Member of the Board Shareholders, 2019 Member of the Board Employees, 2010 Chair of the Audit and Member of the 03 FROM THE BOARDROOM Sustainability Committee HR Committee
Corporate governance POSITION POSITION POSITION Group Executive Board General Manager of Microsoft Norge AS since 2016 Professional Boardmember and management consultant Corporate employee representative of Yara International Chairman of European Works Council (EWC) of Yara Board of Directors EDUCATION EDUCATION International Board message BS in engineering from the U. of Illinois, and MBA from Harvard Bachelor and Master’s in law from the University of Oslo and Business School Master in Auditing and Accounting. IB from United World College EDUCATION Risk management of the Atlantic Skilled Chemical Process operator. EXPERIENCE 04 FINANCIAL STATEMENTS Kimberly Lein-Mathisen is the General Manager of Microsoft EXPERIENCE EXPERIENCE Norway. She is a passionate voice for how technology, sustain- Ms. Pran is a professional board member. She is Strategic ability, and diversity can lift Norway. She has 20+ years of Advisor to the Boards Impact Forum, working to accelerate Mr. Sundbø has been a Yara (Hydro) employee since 1987 experience in Branded Consumer Goods, Pharmaceuticals, climate action for sustainable businesses. Previously she has He has been actively engaged in union matters since 1989 Media, and Technology leading across geographies in North been in the Private Equity industry for 13 years. As a Partner of America, Europe and Asia. Her roles have included CEO of Orkla Herkules Capital Ms. Pran was in charge of the following busi- OTHER ASSIGNMENTS Home & Personal Care; Global VP & Alliance Leader, Eli Lilly; ness areas: Finance, Treasury, Investor Relations, Acquisitions and General Manager, Germany and Norway, Eli Lilly; Co-Founder divestments, strategy and Business development, Legal, Compli- Appear Networks; and Production Leader, Procter & Gamble. ance and ESG (2004-2016). Prior to Herkules Capital BOARD MEETINGS ATTENDANCE 12 Kimberly has extensive board experience including Abelia, Ms. Pran was part of the Deals team in PWC (1999-2004). HR COMMITTEE ATTENDANCE 6 NHST (parent of Dagens Næringsliv), Meda AB, Borregaard, SHARES OWNED AT YEAR-END 2020 339 and Kappa Bioscience. Ms. Pran has previous experience from managing sustainability reporting and strategy in Herkules portfolio companies. OTHER ASSIGNMENTS Sustainability is a focus area in all boards she serves.
BOARD MEETINGS ATTENDANCE 12 OTHER ASSIGNMENTS Ms. Pran is currently on the board of ABG Sundal and SHARES OWNED AT YEAR-END 2020 500 Collier ASA, B2Holding ASA, Zalaris ASA, Motorgruppen AS, Løvenskiold Fossum AS and Hitec Vision ASA
BOARD MEETINGS ATTENDANCE 12
97 AUDIT & SUSTAINABILITY COMMITTEE ATTENDANCE 12 SHARES OWNED AT YEAR-END 2020 2,010 Yara Integrated Report 2020 Back to the overview
John Thuestad (1960) Birgitte Ringstad Vartdal (1977) 01 THIS IS YARA
02 YEAR IN REVIEW POSITION ELECTED BY/YEAR POSITION ELECTED BY/YEAR Member of the Board Shareholders, 2014 Member of the Board Shareholders, 2020 03 FROM THE BOARDROOM Member of the HR Committee
Corporate governance POSITION POSITION Group Executive Board Executive Vice President Bauxite & Alumina at Norsk Hydro Executive Vice President at Statkraft, Responsible for ASA since 2018 Statkraft’s European Wind and Solar Board of Directors Board message EDUCATION EDUCATION Master’s degree in Metallurgy from NTNU, Trondheim, Norway; MSc in Engineering Mathematics from the Norwegian School Risk management MBA from Carnegie Mellon University, Pittsburgh, USA of Science and Technology (NTNU) and a MSc in Financial Mathematics from Heriot-Watt University in Edinburgh 04 FINANCIAL STATEMENTS EXPERIENCE Mr. Thuestad has been EVP of Norsk Hydro ASA and responsible EXPERIENCE for the Bauxite and Alumina Business Area since June 2018. Ms. Vartdal is EVP of Statkraft and responsible for Statkraft’s Prior to this, Thuestad led Hydro Extruded Solutions, Europe. European Wind and Solar. From 2016 to 2019 Vartdal served as From 2013 to 2017, Thuestad held the position of EVP Sapa CEO of Golden Ocean Group, and from 2010 to 2016 as CFO Extrusions Europe. From 2012 to 2013 he led Sapa Profiles with of Golden ocean Group. Previously she has held various production plants in Europe, North America and China. From management positions in Torvald Klaveness and worked for 2009 to 2012 he led Alcoa Global Primary Products with 40 Hydro Energi. locations in Australia, Latin America, Europe and North America. Thuestad has previously been the CEO of Elkem AS and Elkem OTHER ASSIGNMENTS Aluminium AS. Prior to that, Thuestad was Managing Director Ms. Vartdal is currently on the Board of Vartdal Fiskeriselskap of Norzink AS and Fundo AS. Thuestad has served as Board AS, and serves on the Board of several Statkraft AS compa- member/Chairman of Tyssefaldene AS 1997-2000, Board nies. member of Borregaard AS 2005-2007, Statkraft/Groener AS 2000-2003 and as Officer of Alcoa Inc 2010-2011. BOARD MEETINGS ATTENDANCE 7 HR COMMITTEE ATTENDANCE 4 OTHER ASSIGNMENTS SHARES OWNED AT YEAR-END 2020 2,500 Member of the Executive committee of International Aluminium Institute (IAI)
BOARD MEETINGS ATTENDANCE 12
98 SHARES OWNED AT YEAR-END 2020 1,200 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW Board message
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Corporate governance Group Executive Board Board of Directors Board message Risk management
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99 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW MESSAGE FROM THE BOARD OF DIRECTORS 03 FROM THE BOARDROOM Strategy execution Corporate governance Group Executive Board driving improved returns Board of Directors Board message Risk management In 2020, the Board focused its work on responsibly handling the pandemic in the best interest of the company 04 FINANCIAL STATEMENTS and its stakeholders, and on discussing Yara’s strategic direction. Strategy execution and development included portfolio adjustments, reorganization, and the ESG investor seminar.
100 Yara Integrated Report 2020
01 THIS IS YARA Additionally, the company’s integrated reporting A strategy for a sustainable future In 2020, Yara reorganized its activities from functional 02 YEAR IN REVIEW has been matured, as evidenced by this report. This As announced at Yara’s ESG Investor Seminar in De- segments to regional segments, effective 1 June. The includes establishing a strengthened governance and a cember 2020, Yara’s strategy has three main focus areas: change empowered the organization and moved deci- 03 FROM THE BOARDROOM balanced scorecard approach. The Board also remained firstly, to develop and market sustainable food solutions, sions closer to the customer, driving full bottom-line focused on supporting the administration in the signifi- including premium crop nutrition products, digital accountability in each market and enabling the organi- Corporate governance cant transformation the company is undergoing. farming tools, and close collaboration with partners zation to act swiftly in a more regionalized reality amid Group Executive Board throughout the food value chain, secondly, to enable the the pandemic. Board of Directors Covid-19 response hydrogen economy and accelerating the green energy Board message Yara has a triple responsibility in the ongoing global transition by targeting green ammonia opportunities As of the 1 June reorganization, Yara’s business activi- Risk management pandemic: firstly, to safeguard its employees, contrac- within shipping, agriculture, and industrial applications, ties are now carried out within five operational seg- tors, partners, neighbors, and society at large, second- and thirdly, to drive sustainable performance, targeting ments: Europe, Americas, Africa & Asia, Global Plants 04 FINANCIAL STATEMENTS ly, to be a responsible company and act in accordance a ROIC above 10% mid-cycle and reducing Scope 1 and & Operational Excellence, and Industrial Solutions. with government guidelines, and thirdly, to keep oper- Scope 2 emissions by 30% by 2030 compared with 2019. ations running and help support the supply of food and The regional segments (Europe, Americas, and Africa other essential products to society. This means that the In combination with a strong commitment to a clear & Asia) operate in a fully integrated setup, comprising timing of turnarounds, improvement initiatives, and capital allocation policy, Yara is well positioned to production, supply chain, and commercial operations, the project portfolio is being optimized to reduce the continue driving sustainable long-term value creation producing and delivering Yara’s existing fertilizer solu- risk of prolonged outages. to its shareholders and other stakeholders. tions in addition to commercializing and selling new offerings under the guidance of Farming Solutions. Yara operates a Covid-19 Response Team, with re- The Company porting directly to the Yara CEO and with frequent Yara is an integrated food solutions company with an The Global Plants & Operational Excellence segment updates to the Board of Directors. The team has rep- industrial portfolio. Headquartered in Oslo, Norway, operates Yara’s largest and export-oriented produc- resentatives from all Yara’s operational segments and Yara is listed on the Oslo Stock Exchange. Yara’s tion plants (Porsgrunn, Sluiskil) and has a key role in corporate functions, and meets frequently to coordi- knowledge, products, and solutions grow customers’ driving operational improvements, competence devel- nate, support, and share best practices across Yara’s businesses profitably and responsibly, while protecting opment, and technical project execution across Yara’s global operations. Yara’s operations have performed the earth’s resources, food, and environment. production system. This segment also comprises Yara’s well so far during Covid-19, as have agricultural mar- The company mission is to “Responsibly feed the global ammonia trade and shipping activity. kets and supply chains overall. world and protect the planet”.
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01 THIS IS YARA Yara Industrial Solutions mainly provides nitro- The People and Planet dimensions of sustainability are The Ethics and Compliance function maintains and 02 YEAR IN REVIEW gen-based solutions and services across a wide range of governed through Yara’s steering system and defined in implements the Code of Conduct through an extensive industries. This segment performs its activities through our HESQ Policy and Code of Conduct, both signed Compliance Program. The Code of Conduct includes 03 FROM THE BOARDROOM five global commercial units: Transport Reagents, by the President and CEO. They are also integral to our anti-corruption policies and states a clear commit- Mining Applications, Base Chemicals, Industrial business review processes and performance manage- ment to respecting internationally recognized Corporate governance Nitrates, and Yara Marine Technologies. These com- ment, anchored in the CFO function. human rights and labor rights throughout our own Group Executive Board mercial units are backed by six dedicated production operations, as well as in our supply chain. Board of Directors plants across Europe, Latin America, Africa and Asia. The HESQ Policy is maintained by the Corporate Board message HESQ function, which oversees performance on All new employees must complete an Ethics and Risk management Yara has always worked on active portfolio manage- health, safety, quality, security, and environment. Compliance e-learning course within three months of ment. Historically, it has been evidenced e.g. through enrolling in Yara and thereafter every two years. Addi- the divestment of GrowHow UK and the CO busi- The Head of Corporate HESQ reports to EVP Global tional training for managers and employees is targeted 04 FINANCIAL STATEMENTS 2 ness. In 2020, Yara continued to develop its portfo- Plants & Operational Excellence, and presents reports according to risk assessments, and safeguards includes lio through divesting its Joint Venture positions in to the full Board of Directors and Board’s Audit and an anonymous whistle-blowing function. QAFCO and Lifeco. The divestments contributed to Sustainability Committee at least once per year. He streamlining Yara’s portfolio and reallocating capital has organizational responsibility for ensuring that Yara’s Ethics and Compliance Department plays a key and resources in line with our capital allocation policy. appropriate health, safety, environment and security role in the management of all risks related to corruption, governance is in place throughout the company. fraud, human rights, and business partner integrity. Making sustainability a part of governance Ethics training of employees is among the KPIs followed In 2020, the Board updated the mandate and name of Within this framework, Yara’s plants and units by Yara’s Board of Directors. The Chief Compliance Of- the audit committee, establishing the Board Audit and maintain close control of their own health and safety ficer reports administratively to Yara’s General Counsel, Sustainability Committee (BASC). This represents a performance, local employee involvement, compliance twice a year to the Board of Directors, quarterly to the recognition of the fact that People and Planet dimen- with national legislation, and adherence to Yara’s high Board Audit and Sustainability Committee, and month- sions are key drivers for strategy and risk processes, technical and operational requirements. Corporate ly to the CEO (and on an ad hoc basis, as necessary) and these two dimensions, together with Prosperity, HESQ is auditing the units vis-à-vis their adherence to on matters relating to ethics and compliance, including comprise Yara’s integrated performance management. the requirements and standards. human rights and corruption.
102 Yara Integrated Report 2020
01 THIS IS YARA Yara has a Compliance Committee, which is chaired People for operational excellence and innovation. Diverse 02 YEAR IN REVIEW by the CEO and attended by the members of Yara’s Caring for people is key to business success. Safety first teams make better decisions than homogenous teams, Executive Management. The Compliance Committee is a Yara priority, and “Safe by Choice” is the name of and engaged employees perform better. We therefore 03 FROM THE BOARDROOM meets quarterly and acts as a focal point for matters Yara’s safety culture program that will make zero in- prioritize Diversity & Inclusion (D&I) as an important related to ethics and compliance. juries a real possibility. Since its inauguration in 2013, part of the updated strategy. Corporate governance the program has reduced the total recordable injuries Group Executive Board The sustainability governance function reports direct- (TRI) rate from 4.3 in 2013 to 1.3 in 2020. In 2020, our regional and local D&I ambassador Board of Directors ly to the CFO. This function oversees sustainability networks continued to raise awareness and build Board message reporting and benchmarking, as well as the implemen- Safety is not all about statistics – one severe injury or fa- knowledge about minority groups and special D&I Risk management tation of external standards according to relevance and tality is one too many. Yara has developed a program for topics. Following the 2020 uproar over racial in- prioritization. 2020 focus areas include internalizing the prevention of major incidents and a comprehensive equality worldwide, we fast-tracked our D&I work 04 FINANCIAL STATEMENTS the recommendations of the Task Force of Climate process safety program. By reviewing, investigating, and on the topic of race. The objective is to tackle racial Related Financial Disclosures (TCFD). sharing lessons learnt from incidents with high potential bias and discrimination, the lack of ethnic diversity, severity, we can establish effective improvement actions. and ensure equal opportunities with an initial focus Integrated performance management on Black talent. We benchmark performance on Yara integrates holistic measures of company performance In 2019 and 2020, Yara developed operating standards employee engagement and D&I as reported in the into the way we manage our company. We have adopted on occupational health, covering both the physical and performance section. the structure of the WEF Stakeholder Capitalism white- psycho-social work environment, in addition to a pre- paper into our balanced scorecard, reporting according to viously implemented standard on controlling chemical In 2020, we also strengthened the talent review and the People, Planet and Prosperity dimensions. risk related to workers. Pilot workstreams and train- succession management process across the entire orga- ings on psycho-social risk assessment and wellbeing nization. Over 4600 employees were reviewed in the The performance reporting on our balanced scorecard have been initiated during the COVID period and talent review cycle, and about 1200 employees were is found in the People, Planet and Prosperity perfor- promoted for use throughout Yara. nominated as successors to positions or nomination mance chapters, while key developments and strategic pools. Diversity was in focus throughout this process, considerations and actions are described here. Yara’s safety culture combined with a purpose-driven with age, tenure, nationality, and gender all being and engaged workforce, provides a strong foundation monitored.
103 Yara Integrated Report 2020
01 THIS IS YARA Our revised strategy has led us to novel territory with from 6 to 16. The range of these studies is focused on tify risks and take preventive measures to mitigate the 02 YEAR IN REVIEW new customers, new business models, new partners, and non-tariff contract employees, as the tariff schedules potential harm to people and the environment. new content. Our people represent our most important provide strong protection against bias due to gender. 03 FROM THE BOARDROOM asset and we need to continuously invest in the devel- In 2020, Yara took major steps forward in its strategic opment of our collective knowledge – both in terms of In 2020 this study incorporated over 5,000 employees. approach to protecting the planet. First, Yara Farming Corporate governance specialist competencies and management skills. The gaps were reported ranging from 0% in Finland to Solutions was tasked with enabling our regional units Group Executive Board 14% in Colombia. A weighted average pay gap for the to expand our reach and offerings. This included ex- Board of Directors Yara has deployed an interactive e-learning platform, 16 countries included was 3.96%. The gap on a like for ploring new revenue models such as low-carbon or out- Board message offering a single repository for all global e-learning like basis for the original 6 countries has closed from come-based business, selling services with farm-to-fork Risk management programs and contains a wide range of training mate- 5.4% to 4.8% since the 2017 study. connectivity and continued focus on digital platforms. rial. 2020 saw nearly every employee with access to the The Agoro Carbon Alliance market marks a major 04 FINANCIAL STATEMENTS platform, counting about 14,500 having completed at On gender balance, in 2021, we will sharpen our example, in which Yara set up a structure to provide least one course. focus on gender diversity among line managers at the farmers with income based on carbon sequestration. top three levels in the company, currently 253 man- Going forward, knowledge will be a priority. Yara agers. We aim to introduce a practice in line with Second, Yara’s CEO and President committed the com- will invest in a Yara Academy with three focus areas: peer companies and benchmarkable with industry pany to setting Science Based Targets (SBT), ensuring change management, diversity and inclusion, and dy- indices. In this subset of the broader group of senior that Yara’s Climate Roadmap is aligned with the namic upskilling. management positions, 23.7% were women at the goals of the Paris agreement. In partnership with end of 2020. Nutrien and WBCSD, we are undertaking a Sectoral Yara is committed to paying employees fairly, regard- Decarbonization Approach (SDA) for the Nitrogen less of personal beliefs or any individual characteristics. People also covers the company’s broader set of stake- fertilizer sector in support of SBT. Individual remuneration will vary based on specific holders, which are key to the company’s success. The factors such as country, employment market conditions, stakeholder dialogue and the Stakeholder Procedure is Third, planned through 2020 and executed in Feb- position content and position grade, performance, and described in the Stakeholder section. ruary 2021, Yara launched Yara Clean Ammonia – a competence. A 2017 comprehensive analysis of six new global unit which will capture growth opportu- countries identified a gender pay gap in Yara ranging Planet nities within carbon-free food solutions, shipping fuel, from 2.1% in Norway to 16% in Colombia. Yara takes a holistic approach to environmental pro- and other clean ammonia applications, leveraging tection, covering both sourcing of raw materials, our Yara’s unique existing positions within ammonia pro- Yara performed a follow-up gender equal pay gap study own production processes, logistics and the use of our duction, trade, and shipping.
104 in 2020, expanding the number of countries included products. Yara uses a precautionary approach to iden- Yara Integrated Report 2020
01 THIS IS YARA Yara Clean Ammonia took its first major step forward Yara’s operations are also certified according to Prod- and group relief from subsidiaries of NOK 11,105 02 YEAR IN REVIEW by partnering with Statkraft and Aker Horizons to uct Stewardship criteria, which are industry-specific. million (NOK 900 million in 2019). The net foreign establish Europe’s first large-scale green ammonia The principles of Product stewardship ensure that currency translation gain was NOK 999 million com- 03 FROM THE BOARDROOM project in Norway. The partners plan to electrify and proper care is taken along the whole fertilizer value pared with a loss of NOK 613 million in 2019. decarbonize Yara’s ammonia plant in Porsgrunn. chain from product development and the purchase of Corporate governance raw materials, to production, storage, transport and Country-by-country reporting Group Executive Board 2020 also heralded the announcement of a green distribution, and up to use at the farm. Yara’s country-by-country report has been developed Board of Directors ammonia pilot collaboration with Ørsted, located in to comply with legal requirements as stated in the Board message Yara’s Sluiskil, Netherland site. This brings Yara’s All incidents and near misses are reported and fol- Norwe¬gian Accounting Act §3-3d and the Norwe- Risk management green ammonia portfolio to three pilot projects and lowed up systematically. gian Security Trading Act §5-5a, valid from 2014. The one full-scale project. full country-by-country reporting can be found on the 04 FINANCIAL STATEMENTS Prosperity yara.com annual report section. Yara’s work on circular economy progressed with a Yara delivered improved returns and cash flow in new product coming to the market, under the Yara 2020, with earnings before interest, tax, and depre- Corporate governance principles Nature brand. Based on Yara’s partnership with Ve- ciation (EBITDA) up 6% from a year earlier. Safety The Board of Directors and Executive Management olia, the product is firstly targeted for piloting in the performance also improved, with a low and indus- of Yara International ASA review the company’s Spanish market. try-leading 1.3 total recordable injuries (TRI) per 1 corporate governance annually and report on the million working hours. company’s corporate governance in accordance with Environmental protection is also a major part of the Norwegian Accounting Act § 3-3b and the Norwe- Yara’s license to operate, and we are using ISO certi- Yara’s return on invested capital (ROIC) reached gian Code of Practice for Corporate Governance (the fication to ensure we operate in accordance with best 8.0%, up from 6.6% in 2019. EBITDA excluding spe- “Code”), most recently updated 17 October 2018. The practice and work systematically to improve perfor- cial items and deliveries were in line with a year earlier. Code contains stricter requirements than mandated mance. In 2020, Yara achieved a global management by Norwegian law. The Board of Directors’ Corpo- system certificate for the three standards ISO 9001 The parent company Yara International ASA is a rate Governance Report is included in this Integrated (Quality management), ISO 14001 (Environmental holding company, with financial activities and with Report and forms part of the Report of the Board of management), and ISO 45001 (Occupational health corporate functions. Yara International ASA had a net Directors. and safety management). income of NOK 11,690 million in 2020, up from NOK 1,138 million negative in 2019, after dividends » See corporate governance / page 76
105 Yara Integrated Report 2020
01 THIS IS YARA Group Executive Board Kristine Ryssdal, previously General Counsel, took increasing grain prices creating stronger planting and 02 YEAR IN REVIEW The following changes were made to Yara’s Group up the position of EVP HR & General Counsel. crop nutrition incentives for farmers. Nitrogen fertiliz- Executive Board as part of the company’s move to a er markets are robust, with strengthening prices ahead 03 FROM THE BOARDROOM regional segment structure effective 1 June 2020: The following changes were made to Yara’s Group of the Northern hemisphere planting season. Yara’s in- Executive Board effective 1 October 2020: dustrial business has also picked up, following weaker Corporate governance Tove Andersen, previously EVP Production, took up demand in second quarter 2020. Group Executive Board the position of EVP Europe. Lair Hanzen was appointed Special Advisor to the Board of Directors President and CEO, reporting to Svein Tore Holsether. Leveraging its global production and marketing pres- Board message Chrystel Monthean, previously SVP Business Unit ence, Yara is broadening its core as a leading food solu- Risk management Latin America, took up the position of EVP Africa Chrystel Monthean was appointed EVP Yara tions company by developing and marketing premium & Asia. Americas. crop nutrition products and digital farming tools in 04 FINANCIAL STATEMENTS close collaboration with partners throughout the food Lair Hanzen, previously EVP Brazil, took up the Fernanda Lopes Larsen, previously SVP Indirect value chain. Yara is also enabling the hydrogen econo- position of EVP Americas. Procurement, was appointed EVP Yara Africa & Asia. my by targeting green ammonia opportunities within shipping, agriculture, and industrial applications, and Pål Hestad, previously SVP Production North Europe, Future prospects by driving sustainable performance, targeting a ROIC took up the position of EVP Global Plants & Opera- Yara’s industry fundamentals are robust, as the twin above 10% mid cycle and reducing Scope 1 and Scope tional Excellence. challenges of resource efficiency and environmental 2 emissions by 30% by 2030 compared with 2019. footprint requires significant transformations within Terje Knutsen, previously EVP Sales & Marketing, both agriculture and the hydrogen economy. Yara’s Yara’s capital allocation policy is based on an overall took up the position of EVP Farming Solutions. leading food solutions and ammonia positions are well objective to maintain a mid-investment grade credit placed to both address and create business opportuni- rating, while at the same time providing investors with Pablo Barrera Lopez, previously EVP Strategy & ties from these challenges. a potential for cyclical upside in dividends. Yara’s tar- Supply Chain, took up the position of EVP Strategy geted capital structure is a mid- to long-term net debt/ & Communication. Ensuring continuity in food production and related EBITDA range of 1.5-2.0 and a net debt/equity ratio value chains remains a top priority for all countries. below 0.60. Subject to these requirements, Yara’s ordi- Yara’s market environment is in a positive trend, with nary dividend shall be 50% of net income. Shareholder
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01 THIS IS YARA returns are distributed primarily as cash, with share The Board of Directors Yara Internationa 02 YEAR IN REVIEW buybacks as a supplemental lever. Yara’s improving ASA, Oslo 00 March 2021 cash flow from strategy execution, a robust outlook 03 FROM THE BOARDROOM and high hurdle rate for new investments may lead to increased dividend capacity going forward. Corporate governance Group Executive Board Yara has completed significant investments in recent Board of Directors years, through both expansion of existing operations, Board message new builds, and acquisitions. The Board of Directors Trond Berger Kimberly Lein-Mathisen Håkon Reistad Fure Adele B. Norman Pran Chair Vice Chair Member of the Board Member of the Board Risk management underlines that Yara’s focus is on delivering its existing growth and improvement pipeline, and that 04 FINANCIAL STATEMENTS future growth initiatives shall be evaluated with strict capital discipline.
John Thuestad Birgitte R. Vartdal Rune Bratteberg Ragnhild F. Høimyr Yara expects to invest approximately USD 1.3 billion Member of the Board Member of the Board Member of the Board Member of the Board during 2021 based on its current committed mainte- nance and improvement plans and announced growth investments. From 2022, total investments are capped at USD 1.2 billion per annum, including both mainte- nance and growth investments.
Øystein J. Kostøl Geir O. Sundbø Yara’s Board will propose to the Annual General Member of the Board Member of the Board Meeting a dividend of NOK 20 per share for the fiscal year of 2020.
The Board intends to propose to the Annual General Meeting a new buy-back program along the lines of the previous one.
107 Yara Integrated Report 2020 that affect their business and analyze is deployed. Risks are evaluated to Risk management how these risks influence performance. determine whether the level is accept- able or unacceptable and to prioritize 01 THIS IS YARA Yara is committed to proactive and effective risk management to The Enterprise Risk Management func- those that have the greatest potential to mitigate adverse effects on our operations and to identify and explore tion has the responsibility to facilitate impact on our performance. 02 YEAR IN REVIEW business opportunities. Ultimately, risk management contributes to the operational risk management activ- achieving our long-term strategic targets and short-term goals. ities and develop risk policies and tools We implement mitigating strategies and 03 FROM THE BOARDROOM as well as maintaining an aggregated pursue business opportunities to ensure view of risk exposure. The function is that each risk is optimally managed. Corporate governance Yara’s global risk management process society at large. The Board oversees the reporting to the Chief Financial Officer. Risk mitigation plans are based on Group Executive Board aims to identify, assess and manage risk risk management process and carries evaluations of the cost of control and Board of Directors factors that could affect the performance out annual reviews of the company’s Framework and procedures potential impacts relative to the bene- Board message of any parts of the company’s operation. most important risk categories and Yara has implemented a framework fits of reducing the risk. Our operating Risk management To this end, we have implemented a con- internal control arrangements. with clear policies and procedures to segments and expert organizations tinuous and systematic process to miti- facilitate risk management across the are responsible for making business 04 FINANCIAL STATEMENTS gate potential damages and losses, and to Yara’s Executive Management is organization. This creates a stable continuity planning part of their key capitalize on business opportunities. responsible for reviewing and opera- environment within which we can risk management activities and prepar- tionalizing the defined risk appetite by deliver on our strategic and operational ing contingency plans for high-impact, Risk responsibilities maintaining an enterprise-wide system objectives, and systematically identify low-likelihood risks. Risk appetite is broadly defined as the for risk management. The Executive and capture business opportunities. level of risk an entity deems acceptable Management performs risk assessments Once primary risks are managed, we in the pursuit of overall goals. Yara’s and actively monitors the development Our framework is inspired by the Com- continually monitor residual risks to en- Board of Directors is responsible for of top risks and initiates actions ac- mittee of Sponsoring Organizations sure that they remain at an acceptable defining Yara’s risk appetite. The Board cordingly. Risk assessments performed of the Treadway Commission (COSO) level and that events are properly ad- and Executive Management have jointly by the operating segments and expert ERM framework and the ISO 31000 dressed and managed. The risk profile evaluated and defined risk appetite organizations are reviewed periodically risk management standard as the best is reviewed and updated at least annual- across key operational and strategic in business review meetings. practice benchmarks for assessing the ly, with more frequent updates if new dimensions, arriving at a set of practical soundness, efficiency and effectiveness opportunities or risks are identified. guidance statements on key risks. These Understanding and managing risk is an of our risk management. The risk mitigation plan is reviewed risk appetite statements set boundaries integral part of all our business activi- and updated on a bi-monthly basis to for strategic initiatives, guide resource ties. The operating segments and expert The materiality of each risk factor is reflect the current status of risks and allocation and aid decision-making organizations are the risk owners and determined by assessing the likelihood action plans and is communicated to within the company. Furthermore, they regularly perform risk assessments and consequence. In this appraisal, a the Executive Management during
108 convey the way we approach and evalu- based on established procedures to combination of qualitative and quan- bi-monthly business review meetings. ate risk to our investors, customers and identify, assess and manage the risks titative risk assessment techniques Yara Integrated Report 2020
01 THIS IS YARA FINANCIAL STATEMENTS 02 YEAR IN REVIEW Transparent 03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS performance
Consolidated financial statements Financial statements for Yara International ASA Yara is committed to transparent and diligent Statement from the Board and the reporting of the company’s performance. The CEO of Yara International ASA consolidated accounts have been prepared in Auditor’s report accordance with the EU-approved IFRS standards Reconciliation of alternative performance measures in and pertaining interpretation standards applicable the Yara Group as of 31st December, 2020 and disclosure requirements that follow from the Norwegian Accounting Act as of 31st December, 2020.
109 Yara Integrated Report 2020 Financial Statements
01 THIS IS YARA
02 YEAR IN REVIEW Consolidated financial statements 110 4 Investments in non-current assets 145 8 Other disclosures 201 4.1 Property, plant and equipment 145 8.1 Related parties 201 03 FROM THE BOARDROOM Consolidated statement of income 111 4.2 Intangible assets 149 8.2 Executive Management remuneration 203 Consolidated statement of comprehensive income 112 4.3 Associated companies and joint ventures 151 8.3 External audit remuneration 210 04 FINANCIAL STATEMENTS Consolidated statement of changes in equity 113 4.4 Joint operations 155 8.4 Composition of the group 211 Consolidated Statement of Financial Position 114 4.5 Leases 157 8.5 Post balance sheet events 213 Consolidated financial statements Consolidated statement of cash flows 116 4.6 Other non-current assets 160 Financial statements for 4.7 Impairment on non-current assets 161 Financial statements for Yara International ASA 4.8 Committed future investments 165 Basis for preparation 117 Yara International ASA 214 Statement from the Board and the 5 Equity and liabilities 166 CEO of Yara International ASA Notes to the consolidated 5.1 Share information 166 Statement from the Board and the financial statements 120 Auditor’s report 5.2 Non-controlling interests 167 CEO of Yara International ASA 241 5.3 Interest-bearing debt 169 Reconciliation of alternative 1 Key sources of estimation uncertainty, performance measures in 5.4 Pensions and other long-term employee judgments and assumptions 120 Auditor’s report 244 the Yara Group benefit obligations 171 2 Results for the year 122 5.5 Trade and other payables 177 Reconciliation of alternative 2.1 Revenue from contracts with customers 122 5.6 Provisions and contingencies 178 performance measures in the Yara Group 249 2.2 Other income 125 5.7 Contractual obligations 181 2.3 Segment information 126 5.8 Secured debt and guarantees 182 2.4 Raw materials, energy costs and freight expenses 132 6 Financial Risk 183 2.5 Payroll and related costs 132 6.1 Financial risks 183 2.6 Other operating expenses 132 6.2 Hedge accounting 190 2.7 Financial income and expenses 133 6.3 Financial instruments 193 2.8 Income taxes 134 7 Business initiatives 200 3 Current assets 140 7.1 Disposal of investments 200 3.1 Inventories 140 7.2 Minority buy-out 200 3.2 Trade receivables 142 3.3 Prepaid expenses and other current assets 144 3.4 Cash and cash equivalents 144
110 Due to rounding differences, figures or percentages may not add up to the total. Yara Integrated Report 2020 Consolidated statement of income
01 THIS IS YARA
02 YEAR IN REVIEW USD millions, except share information Notes 2020 2019 USD millions, except share information Notes 2020 2019
03 FROM THE BOARDROOM Revenue from contracts with customers 2.1, 2.3 11,591 12,858 Net income attributable to 04 FINANCIAL STATEMENTS Other income 2.2 137 78 Shareholders of the parent 691 599 Revenue and other income 11,728 12,936 Non-controlling interests 5.2 - (10) Consolidated financial statements Net income 690 589 Financial statements for Raw materials, energy costs and freight expenses 2.4 (7,819) (9,317) Yara International ASA Change in inventories of own products (201) (17) Earnings per share 1) 2.58 2.20 Statement from the Board and the Payroll and related costs 2.5 (1,136) (1,180) Weighted average number of shares outstanding 2) 5.1 267,985,860 272,319,232 CEO of Yara International ASA Depreciation and amortization 4.1, 4.2, 4.5 (919) (922) 1) Yara currently has no share-based compensation that results in a dilutive effect on earnings per share. Impairment loss 4.7 (46) (43) Auditor’s report 2) Weighted average number of shares outstanding was reduced in 2020 due to the share buyback program. Reconciliation of alternative Expected and realized credit loss on trade receivables 3.2 (17) (7) performance measures in Other operating expenses 2.6 (414) (460) the Yara Group Operating costs and expenses (10,551) (11,946)
Operating income 1,176 989
Share of net income in equity-accounted investees 4.3 20 65 Interest income and other financial income 2.7 62 76 Foreign exchange gain/(loss) 2.7, 6.1 (243) (145) Interest expense and other financial items 2.7 (165) (182) Income before tax 850 803
Income tax expense 2.8 (160) (214) Net income 690 589
111 Yara Integrated Report 2020 Consolidated statement of comprehensive income
01 THIS IS YARA
02 YEAR IN REVIEW USD millions, except share information Notes 2020 2019
03 FROM THE BOARDROOM Net income 690 589 04 FINANCIAL STATEMENTS Other comprehensive income that may be reclassified to statement of income in subsequent periods (net of tax) Consolidated financial statements Currency translation adjustments (56) 30 Financial statements for Hedge of net investments 2.8, 6.2 22 (9) Yara International ASA Net other comprehensive income that may be reclassified to statement of income in subsequent periods, net of tax (34) 20 Statement from the Board and the CEO of Yara International ASA Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Auditor’s report Currency translation adjustments 1) 28 (24) Reconciliation of alternative Net gain/(loss) on equity instruments at fair value through other comprehensive income 6.3 (3) (2) performance measures in Remeasurement gains/(losses) on defined benefit plans 2.8, 5.4 (51) (9) the Yara Group Net other comprehensive income that will not be reclassified to statement of income in subsequent periods, net of tax (26) (35)
Reclassification adjustments of the period (6) 1 Total other comprehensive income, net of tax (66) (14)
Total comprehensive income, net of tax 624 576
Total comprehensive income attributable to Shareholders of the parent 624 585 Non-controlling interests 5.2 - (10) Total 624 576
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as ”foreign operations” to Yara International ASA.
112 Yara Integrated Report 2020 Consolidated statement of changes in equity
01 THIS IS YARA Fair value Premium Currency reserve of Cash Hedge Total Attributable Non- Share paid-in translation financial assets flow of net other Retained to shareholders controlling Total 02 YEAR IN REVIEW USD millions, except share information Notes Capital 1) capital adjustments at FVOCI 4) hedges investments reserves earnings of the parent interests equity
03 FROM THE BOARDROOM Balance at 31 December 2018 66 (49) (1,319) (2) (3) (199) (1,523) 10,189 8,683 227 8,910
04 FINANCIAL STATEMENTS Net income ------599 599 (10) 589 Consolidated financial statements Other comprehensive income, net of tax - - 7 (2) - (9) (4) (9) (14) - (14) Total comprehensive income - - 7 (2) - (9) (4) 589 585 (10) 575 Financial statements for Yara International ASA Transactions with non-controlling interests 5.2 - - (54) - - - (54) (97) (151) (137) (288) Statement from the Board and the 2) CEO of Yara International ASA Treasury shares 5.1 ------(83) (83) - (83) Dividends distributed 5.1 ------(203) (203) (2) (205) Auditor’s report Balance at 31 December 2019 66 (49) (1,367) (4) (2) (209) (1,582) 10,395 8,830 79 8,909 Reconciliation of alternative performance measures in the Yara Group Net income ------691 691 - 690 Other comprehensive income, net of tax - - (35) (3) - 22 (16) (51) (67) 1 (66) Total comprehensive income - - (35) (3) - 22 (16) 640 624 - 624
Treasury shares 2) 3) 5.1 (2) ------(386) (388) - (388) Share capital increase in subsidiary, non-controlling interest 5.2 ------1 1 Dividends distributed 5.1 ------(925) (925) (1) (926) Balance at 31 December 2020 64 (49) (1,402) (7) (2) (187) (1,599) 9,724 8,141 79 8,220
1) Par value 1.70. 2) As approved by General Meeting 7 May 2019. 3) As approved by General Meeting 7 May 2020. 4) See note 6.3 Financial instruments.
113 Yara Integrated Report 2020 Consolidated statement of financial position
01 THIS IS YARA
02 YEAR IN REVIEW USD millions, except share information Notes 31 Dec 2020 31 Dec 2019 USD millions, except share information Notes 31 Dec 2020 31 Dec 2019
03 FROM THE BOARDROOM Assets Equity and liabilities 04 FINANCIAL STATEMENTS Non-current assets Equity Deferred tax assets 2.8 485 484 Share capital reduced for treasury stock 5.1 64 66 Consolidated financial statements Intangible assets 4.2 988 1,031 Premium paid-in capital (49) (49) Financial statements for Property, plant and equipment 4.1 8,579 8,614 Total paid-in capital 15 17 Yara International ASA Right-of-use assets 4.5 430 428 Statement from the Board and the Associated companies and joint ventures 4.3 108 970 Other reserves (1,599) (1,582) CEO of Yara International ASA Other non-current assets 4.6 380 414 Retained earnings 9,724 10,395 Auditor’s report Total non-current assets 4.6 10,969 11,940 Total equity attributable to shareholders of the parent 8,141 8,830 Reconciliation of alternative performance measures in Current assets Non-controlling interests 5.2 79 79 the Yara Group Inventories 3.1 2,161 2,360 Total equity 8,220 8,909 Trade receivables 3.2 1,478 1,564 Prepaid expenses and other current assets 3.3 630 553 Non-current liabilities Cash and cash equivalents 3.4 1,363 300 Employee benefits 5.4 627 498 Non-current assets or disposal group classified as held-for-sale 5 9 Deferred tax liabilities 2.8 388 416 Total current assets 5,637 4,785 Other long-term liabilities 6.3 138 247 Long-term provisions 5.6 361 303 Total assets 16,605 16,725 Long-term interest-bearing debt 5.3 3,371 2,698 Long-term lease liabilities 4.5 335 337 Total non-current liabilities 5,220 4,499
114 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW The Board of Directors of Yara International ASA USD millions, except share information Notes 31 Dec 2020 31 Dec 2019 Oslo, 25 March 2021 03 FROM THE BOARDROOM Current liabilities 04 FINANCIAL STATEMENTS Trade and other payables 5.5 1,880 1,614 Prepayments from customers 2.1 372 399 Trond Berger Kimberly Lein-Mathisen Adele Bugge Norman Pran Consolidated financial statements Current tax liabilities 2.8 156 140 Chairperson Vice chair Board member Financial statements for Short-term provisions 5.6 75 72 Yara International ASA Other short-term liabilities 6.3 95 101 Statement from the Board and the Bank loans and other interest-bearing short-term debt 5.3 345 494 CEO of Yara International ASA John Thuestad Rune Bratteberg Birgitte Ringstad Vartdal Current portion of long-term debt 5.3 132 398 Board member Board member Board member Auditor’s report Short-term lease liabilities 4.5 111 98 Reconciliation of alternative Total current liabilities 7.2 3,165 3,317 performance measures in Ragnhild Flesland Høimyr Geir O. Sundbø Håkon Reistad Fure the Yara Group Total equity and liabilities 16,605 16,725 Board member Board member Board member
Number of shares outstanding 1) 263,001,109 271,040,624
1) Number of shares outstanding was reduced in 2020 due to the share buy-back program. Øystein Kostøl Svein Tore Holsether Board member President and CEO
115 Yara Integrated Report 2020 Consolidated statement of cash flows
01 THIS IS YARA
02 YEAR IN REVIEW USD millions Notes 2020 2019 USD millions, except share information Notes 2020 2019
03 FROM THE BOARDROOM Operating activities Investing activities 04 FINANCIAL STATEMENTS Operating income 1,176 989 Purchases of property, plant and equipment 4.1 (739) (1,066) Net cash outflow on business combinations (13) - Consolidated financial statements Adjustments to reconcile operating income to net Purchases of other long-term investments 4.2 (17) (30) cash provided by operating activities Financial statements for Proceeds from sales of property, plant and equipment 11 13 Depreciation and amortization 4.1, 4.2, 4.5 919 922 Yara International ASA Net cash flow on divested assets - 3 Impairment loss 4.7 46 43 Statement from the Board and the Proceeds from sales of equity-accounted investees and Write down inventory and trade receivables 14 12 4.3 1,006 37 CEO of Yara International ASA other non-current assets Income taxes paid (264) (135) Net cash provided by/(used in) investing activities 248 (1,044) Auditor’s report Dividend from equity-accounted investees 4.3 9 166
Reconciliation of alternative 1) Interest and bank charges received/(paid) (132) (169) Financing activities performance measures in (Gain)/loss on disposal of non-current assets 4.1, 4.2 6 (33) 3) the Yara Group Loan proceeds 5.3 780 538 Gain on sale of equity-accounted investees 4.3 (97) - Principal payments 3) 5.3 (650) (920) Other (6) (4) Payments of lease liabilities 4.5 (122) (108) Purchase of treasury shares 5.1 (309) (65) Working capital changes that provided/(used) cash Dividends 5.1 (926) (203) Trade receivables 39 (5) Other cash transfers (to)/from non-controlling interests 5.2 - (1) Inventories 119 171 Net cash used in financing activities (1,228) (758) Prepaid expenses and other current assets 2) 161 (21)
Trade and other payables 107 (54) Foreign currency effects on cash and cash equivalents (2) (7) Other interest-free liabilities 2) (51) 25
Net cash provided by operating activities 2,047 1,907 Net increase/(decrease) in cash and cash equivalents 1,064 98 Cash and cash equivalents at 1 January 301 202 1) Including interest expenses on lease liabilities. Cash and cash equivalents at 31 December 4) 3.4 1,365 301 2) 2020 includes USD 103 million net cash inflow due to currency forward contracts and prior periods’ collateral deposits with banks to keep credit exposure from derivatives within agreed limits. 3) Loan proceeds and principal payments related to short-term borrowings for which maturity is three months or less, are presented net. Bank deposits not available for the use of other group 3.4 32 35 4) Excluded expected credit loss provisions on bank deposits, which amounts to USD 2.5 million (2019: USD 0.9 million). companies See note 3.4 for more information. 116 Yara Integrated Report 2020 Basis for preparation
01 THIS IS YARA
Corporate information The consolidated financial statements are Paris agreement. In partnership with Nutrien attributed to the owners of Yara International 02 YEAR IN REVIEW Yara (the Group) consists of Yara International presented in US dollars (USD). All values are and World Business Council for Sustainable ASA and to the non-controlling interests, ASA and its subsidiaries. Yara International rounded to the nearest USD million, except Development (WBCSD), we are undertaking even if this results in the non-controlling 03 FROM THE BOARDROOM ASA is a public limited company incorporated when otherwise indicated. The functional cur- a Sectoral Decarbonization Approach (SDA) interests having a deficit balance. in Norway. The Company’s registered office rency of Yara International ASA is Norwegian for the Nitrogen fertilizer sector in support 04 FINANCIAL STATEMENTS is at Drammensveien 131, Oslo, Norway. The kroner (NOK). of SBT. The goals of this climate roadmap All intra group transactions, balances, income principal activities of the Group are described have been considered when preparing these and expenses are eliminated in full upon con- Consolidated financial statements in note 2.3 Segment information, note 4.3 Materiality judgments consolidated financial statements. solidation. Accounting policies of subsidiaries Financial statements for Associated companies and joint ventures, and These financial statements aim to provide use- are changed if necessary to ensure consisten- Yara International ASA note 4.4 Joint operations. ful financial information which meet the com- Basis of consolidation cy with the policies adopted by the Group. mon information needs of its primary users. The consolidated financial statements include Statement from the Board and the These consolidated financial statements Materiality judgments are necessary to meet Yara International ASA and entities controlled Profit or losses from transactions with associ- CEO of Yara International ASA consist of the Group and the Group’s interests this objective, and Yara has made such judg- by Yara International ASA (its subsidiaries). ates and joint ventures are recognized in the Auditor’s report in associated companies and jointly controlled ments related to recognition, measurement, Control is achieved when the Group has Group’s consolidated financial statements only Reconciliation of alternative entities. Information on the Group’s structure presentation and disclosures. With reference power over the investee, is exposed to, or has to the extent of interest in the associate or performance measures in is provided in note 8.4 Composition of the to the complete set of financial statements, rights to, variable returns from its involve- joint venture that is not related to the Group. the Yara Group Group. Information on other related party information is considered material if omitting, ment with the investee, and has the ability to relationships of the Group is provided in note misstating or obscuring it could reasonably be use its power to affect its returns. When the Changes in the Group’s ownership in subsid- 8.1 Related parties. expected to influence decisions taken by prima- Group has less than a majority of the voting iaries that do not result in the Group losing ry users based on the information provided. The rights of an investee, it has power over the control, are accounted for as equity transac- Statement of compliance materiality judgments are reassessed at each investee if the voting rights in practice are tions. Any difference between the amount by These consolidated financial statements have reporting date and updated based on changed sufficient to unilaterally direct the relevant ac- which the non-controlling interests are adjust- been prepared in accordance with Interna- facts and Yara specific circumstances. tivities of the investee. The Group re-assess- ed and the fair value of the consideration paid tional Financial Reporting Standards (IFRS) es if it controls an investee when facts and or received, is recognized directly in equity as endorsed by the European Union (EU) and Yara’s climate roadmap circumstances indicate that there are changes and attributed to owners of the Company. effective as of 31 December 2020. Yara also Yara announced the Group’s climate roadmap to one or more elements of control. provides additional disclosures in accordance on the company’s ESG-seminar 7 Decem- EU Directive 83/349 with requirements in the Norwegian Account- ber 2020. In brief Yara has set an intensity Consolidation of a subsidiary begins when the Yara GmbH & Co. KG with legal seat in
ing Act. KPI of 10% reduction in CO2e per tonne N Group obtains control and ceases when the Dülmen/Germany, and its directly and within 2025, a KPI on reduction of absolute Group loses control. This means that income indirectly owned subsidiaries, are included in The consolidated financial statements have emissions by 30% within 2030, and an and expenses of subsidiaries acquired or the consolidated financial statement of Yara been prepared under the historical cost con- ambition to be climate neutral within 2050. disposed of are included in the consolidated International ASA as defined by sec. 291 HGB vention; modified to include revaluation to fair Yara has also announced its commitment statement of comprehensive income from (German commercial code). For the purpose value of equity instruments, derivative finan- to setting a Science Based Target (SBT), the effective date of acquisition and up to of sec. 264b HGB, Yara GmbH & Co. KG cial instruments, contingent consideration and which is a process to confirm that climate the effective date of disposal, as appropriate. makes use of the relief to not disclose any 117 defined benefit plan assets. targets are aligned with the goals of the Total comprehensive income of subsidiaries is independent financial statement and notes. Yara Integrated Report 2020 Foreign currency translation tax charges and credits attributable to these New and revised accounting standards and on financial reporting. The amendments Group companies borrowings and monetary items. When the interpretations to IFRS 9 and IAS 39 provide temporary The individual financial statements of a subsid- net investment is disposed of, or the mone- Adopted reliefs which enable hedge accounting to iary are prepared in the subsidiary’s functional tary item is settled, they are recognized in the The Group has applied the below amend- continue for affected hedges during the 01 THIS IS YARA currency. In preparing the consolidated financial consolidated statement of income. ments to IFRS that are effective for account- period of uncertainty before the interest statements, the financial statements of foreign ing periods beginning on or after 1 January rate benchmarks are amended as a result 02 YEAR IN REVIEW operations are translated using the exchange Significant accounting policies 2020, and which are relevant for Yara. Yara of the reforms. The amendments to IFRS rates at year-end for statement of financial Accounting policies according to the list below has not identified significant impact to the 7 introduce new disclosure requirements. 03 FROM THE BOARDROOM position items and monthly average exchange are included in the relevant notes to the Con- Group’s consolidated financial statements as The amendments are applicable to Yara as rates for statement of income items. Trans- solidated Financial Statements: a result of the mentioned amendments. the Group has fair value hedges exposed 04 FINANCIAL STATEMENTS lation gains and losses, including effects of to the interest rate benchmarks NIBOR exchange rate changes on transactions desig- Accounting Policies • Amendments to IFRS 3 and STIBOR as well as net investment Consolidated financial statements nated as hedges of net foreign investments, are - Definition of a Business hedges exposed to USD LIBOR, ref. Financial statements for included in other comprehensive income as a Revenue recognition 2.1 Amendments to IFRS 3 are issued to help note 6.2 Hedge accounting. Yara closely separate component. The translation difference entities determine whether an acquired monitors the outcome of relevant interest Yara International ASA Dividends received 2.7 derived from each foreign subsidiary, associated set of activities and assets are a business rate benchmark reforms to determine the Statement from the Board and the Interest income 2.7 company or jointly controlled entity, is reversed or not. These amendments narrow and effects for Yara. Please see note 6.1 Finan- CEO of Yara International ASA through the statement of income as part of Income Taxes 2.8 clarify the definition of a business, and cial risks for more information on Yara’s Auditor’s report the gain or loss arising from the divestment or Inventories 3.1 permit a simplified assessment of whether strategy to manage the risk exposure relat- liquidation of such a foreign operation. an acquired set of activities and assets is a ed to the interest rate benchmark reforms. Reconciliation of alternative Trade receivables 3.2 group of assets rather than a business. Yara performance measures in Property, plant and equipment 4.1 Transactions and balances apply them to transactions that are either • Amendments to IFRS 16 the Yara Group Goodwill 4.2 In individual companies, transactions in business combinations or asset acquisitions. - Covid-19-Related Rent Concessions currencies other than the entity’s functional Intangible assets 4.2 In May 2020, the IASB amended IFRS 16 Research and development currency are recognized by applying the ex- 4.2 • Amendments to IAS 1 and IAS 8 Leases to provide relief to lessees from expenditures change rate at the date of transaction. Mone- - Definition of Material applying the IFRS 16 guidance on lease Investments in associates and joint tary items denominated in foreign currencies 4.3 Amendments to IAS 1 and IAS 8 were modifications to rent concessions arising as ventures are translated using the exchange rate at the issued to clarify the definition of material a direct consequence of the Covid-19 pan- balance sheet date. Non-monetary items that Investments in joint operations 4.4 and how it should be applied by (a) includ- demic. As a practical expedient, a lessee are measured in terms of historical cost in a Leases 4.5 ing in the definition guidance that until now may elect not to assess whether a Covid-19 Impairment of non-current assets foreign currency are not re-translated. 4.7 has featured elsewhere in IFRS standards; related rent concession from a lessor is a other than goodwill (b) improving the explanations accompany- lease modification. A lessee that makes this All foreign currency translations are recognized Own shares 5.1 ing the definition; and (c) ensuring that the election accounts for any change in lease in the statement of income except for foreign definition of material is consistent across payments resulting from the Covid-19 relat- Dividends paid 5.1 currency translations on foreign currency all IFRS standards. ed rent concession the same way it would Employee benefit obligations 5.4 borrowings that provide a hedge against a net account for the change under IFRS 16, if the investment in a foreign entity, or monetary Provisions 5.6 • Amendments to IFRS 9, IAS 39 and change were not a lease modification. Yara items that are regarded as a part of the net Hedge accounting 6.2 IFRS 7 - Interest rate benchmark reform was not granted any significant rent conces- investments. Such foreign currency transla- Financial Instruments 6.3 Amendments to IFRS 9, IAS 39 and IFRS sions during 2020 as a direct consequence tions are recognized as a separate component 7 were issued to respond to the effects of the Covid-19 pandemic. Fair value measurement 6.3 118 of other comprehensive income, including of the interest rate benchmark reforms Yara Integrated Report 2020 Not yet effective gent Assets or IFRIC 21 Levies, if incurred • Amendments to IAS 37 The below amendments to IFRS applicable separately. The exception requires entities – Costs of Fulfilling a Contract to Yara have been issued but were not yet to apply the criteria in IAS 37 or IFRIC The amendments are effective for annual effective on the balance sheet date. Yara will 21, respectively, instead of the Concep- periods beginning on or after 1 January 01 THIS IS YARA implement the changes from their effective tual Framework, to determine whether a 2022. They specify which costs an entity date, subject to endorsement by the EU. present obligation exists at the acquisition needs to include when assessing whether 02 YEAR IN REVIEW At the date of the Board approval of these date. At the same time, the amendments a contract is onerous or loss-making. The financial statements, Yara has not identified add a new paragraph to IFRS 3 to clarify amendments are intended to provide clari- 03 FROM THE BOARDROOM significant impact to Yara’s consolidated that contingent assets do not qualify for ty and help ensure consistent application of financial statements as a result of amend- recognition at the acquisition date. the standard. 04 FINANCIAL STATEMENTS ments effective for 2021. Yara has not yet fully assessed the impact of changes which • Amendments to IAS 16 • IFRS 17 Insurance Contracts Consolidated financial statements are effective from 2022 and beyond. – Proceeds before Intended Use IFRS 17 will be effective for annual periods Financial statements for The amendments are effective for annual beginning on or after 1 January 2023. Yara International ASA • Amendments to IFRS 9, IAS 39, IFRS periods beginning on or after 1 January It covers recognition, measurement, 7, IFRS 4 and IFRS 16 – Interest Rate 2022. They prohibits entities from deduct- presentation and disclosure for insurance Statement from the Board and the Benchmark Reform - Phase 2 ing from the cost of an item of property, contracts. Once effective, IFRS 17 will re- CEO of Yara International ASA The amendments are effective for ac- plant and equipment (PP&E), any proceeds place IFRS 4 Insurance contracts. Yara has Auditor’s report counting periods beginning on or after 1 of the sale of items produced while bring- not yet assessed implications of this new January 2021. They provide temporary ing that asset to the location and condition standard for the Group. Reconciliation of alternative reliefs which address the financial report- necessary for it to be capable of operating performance measures in the Yara Group ing effects when an interbank offered in the manner intended by management. rate (IBOR) is replaced with an alternative Instead, an entity recognizes the proceeds nearly risk-free interest rate. Yara closely from selling such items, and the costs of monitors the outcome of relevant interest producing those items, in profit or loss. rate benchmark reforms to determine the effects for Yara. See note 6.1 Financial risks for more information on Yara’s strate- gy to manage the risk exposure related to the interest rate benchmark reforms.
• Amendments to IFRS 3 – Reference to the Conceptual Framework The amendments are effective for annual periods beginning on or after 1 January 2022. They add an exception to the recog- nition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Pro- 119 visions, Contingent Liabilities and Contin- Yara Integrated Report 2020 1 Key sources of estimation uncertainty, judgments and assumptions
01 THIS IS YARA
General longed adverse market conditions related for agement to estimate the future cash flows 133 million is related to unused tax losses in 02 YEAR IN REVIEW The preparation of consolidated financial example to increases in natural gas cost and/ expected to arise from the cash-generating Brazil. Further information about deferred tax statements in accordance with International or lower market prices for products sold could unit and was a suitable discount rate in order is provided in note 2.8. 03 FROM THE BOARDROOM Financial Reporting Standards (IFRS) and the lead to temporary or permanent closures of to calculate present value. The carrying value use of Yara’s accounting policies requires man- production facilities. Such closures will be of goodwill and other intangible assets at 31 Yara’s operations in Brazil also generate 04 FINANCIAL STATEMENTS agement to make judgments, estimates and considered as an impairment indicator and December 2020 is USD 831 million and USD tax credits. Recognition of these assets are assumptions that affect the reported amounts an impairment test will be carried out. The 157 million, respectively. Yara recognized based on Management assumptions relat- Consolidated financial statements of assets, liabilities, revenues and expenses. outcome of such impairment tests may be impairment of goodwill and other intangible ed to future operating results and timing Financial statements for The estimates and underlying assumptions are that significant impairment losses are recog- assets of USD 12 million and USD 3 million of utilization. Yara has recognized USD 125 Yara International ASA based on historical experience and various oth- nized in the statement of income. A reduction in 2020, respectively. Details of recognized million of such tax credits which are classified er factors that are considered to be reasonable to the expected useful life of the assets can goodwill are provided in note 4.2 and the as non-current assets. Unrecognized amounts Statement from the Board and the under the circumstances. Actual results may also lead to periods with higher depreciation impairment information, including sensitivity of the same credits i USD 19 million which CEO of Yara International ASA differ from these estimates. The estimates expense going forward. Yara has carried out disclosures, is provided in note 4.7. Other reflects the challenges of utilizing all credits Auditor’s report and the underlying assumptions are reviewed impairment tests for certain production fa- intangible assets mainly comprises software, through ordinary operations. Further informa- Reconciliation of alternative on an ongoing basis. Revisions to accounting cilities during 2020, mainly due to uncertain customer relationships and patent and trade- tion is provided in note 4.6. performance measures in estimates are recognized in the period in which economic conditions in local markets. No fa- marks either identified as part of the purchase the Yara Group the estimate is revised if the revision affects cilities have been temporarily or permanently price allocation of new business combinations Yara is engaged in a number of juridical only that period, or in the period of the revision closed during 2020 due to inadverse market or internally developed. See note 4.2 and 4.7 and administrative proceedings related to and future periods if the revision affects both conditions. The wholly-owned ammonia plant for further details. disputed tax matters with uncertain outcome. current and future periods. The judgments, in Point Lisas, Trinidad was closed in Decem- Management is required to estimate the estimates and assumptions made that may ber 2019. Impairments recognized in prior Tax assets and liabilities probability of cash outflow on a case-by case significantly differ from actual results and periods have been evaluated for reversals. Yara recognizes deferred tax assets if it is basis. The estimated maximum exposure on may lead to material adjustments to carrying Total impairment recognized on property, probable that sufficient taxable income will tax contingencies is approximately USD 190 amounts are listed below. plant and equipment in 2020 is USD 29 be available in the future against which the million of which USD 105 million is related to million. The carrying amount of property, temporary differences and unused tax losses tax cases in Brazil. The estimated maximum Key sources of estimation uncertainty plant and equipment at 31 December 2020 is can be utilized. Management has considered exposure of USD 190 million is excluding a USD 8,579 million. See note 4.1 and 4.7 for future taxable income in assessing whether separately disclosed case with the Dutch tax Impairment of assets further details. these assets should be recognized, taking authorities. Further information is provided in Property, plant and equipment into consideration that stronger evidence note 5.6. Yara has significant carrying amounts related Goodwill and other intangible assets for utilization is required for entities with a to property, plant and equipment recognized Determining whether goodwill and oth- history of recent tax losses. The carrying Yara has operations in multiple countries, in the consolidated statement of financial er intangible assets are impaired requires amounts of deferred tax assets and deferred each with its own taxation regime. Man- position. The value in use of some of these an estimation of the value in use of the tax liabilities at 31 December 2020 are USD agement is required to make judgments, assets could be influenced by changes in cash-generating units to which goodwill and 485 million and USD 388 million, respec- estimates and assumptions in relation to market conditions in the regions where Yara other intangible assets have been allocated. tively. The amount of unrecognized deferred tax treatments. In certain cases, it may be 120 carries out its business. Significant and pro- The value in use calculation requires man- tax assets is USD 312 million, of which USD unclear how tax law applies to a particular Yara Integrated Report 2020 transaction or circumstance until the relevant The carrying amount of the net pension and and strategy development processes, and 2050. These risks and opportunities have taxation authority of court takes a decision other long-term employee benefits liabilities risk mitigating actions and new business been included in the impairment testing of in the future. Consequently, this may affect at 31 December 2020 is USD 552 million. opportunities are currently being targeted and tangible assets in Europe which are sensitive tax assets and liabilities. When assessing The gross pension and other long-term developed. Preparation of relevant scenario for impairment, and no impairment is rec- 01 THIS IS YARA whether uncertainty over tax treatments employee benefits liabilities have a carrying analyses is ongoing. ognized. For more information, see note 4.7 exists, Yara will consider current tax law and value of USD 2,536 million at the same date. Impairment on non-current assets. 02 YEAR IN REVIEW regulations, general practice, decisions and Detailed information, including sensitivity The risks of climate change for Yara’s financial rulings by the court or other relevant author- disclosures, is provided in note 5.4. performance can be classified as transition Critical judgments 03 FROM THE BOARDROOM ities as well as tax memorandum prepared risks or physical risks. Transition risks are risk in applying accounting policies by internal or external experts. In case of Covid-19 to the Group that arise from the transition to 04 FINANCIAL STATEMENTS uncertain tax treatments Yara will consider As a result of the outbreak of Covid-19 in a low-carbon and climate-resilient economy. Assessment of influence and control and the probability that a taxation authority will 2020, all significant estimates and underlying Physical risks are risks to the Group that arise classification of joint arrangements Consolidated financial statements accept an uncertain tax treatment. When assumptions to the accounting areas listed from the physical effects of climate change. Management has used judgment in relation Financial statements for concluding that it is not probable that the above have been reviewed in the light of this These transition and physical risks can affect to the classification of Yara Freeport LLC DBA Yara International ASA taxation authority will accept an uncertain new situation. So far, Yara has not experi- Yara in a multitude of ways and result in Texas Ammonia and classified it as a joint tax treatment, Yara will reflect the effect of enced any major disruption to its operations material adjustments to the carrying amounts operation. The unit constructed an ammo- Statement from the Board and the uncertainty by using the method that provides or experienced significant financial effects of assets and liabilities. Significant judgment nia plant in the US which opened in April CEO of Yara International ASA better prediction resolution of uncertainty. due to Covid-19. In addition to the accounting may be needed to estimate such adjustments 2018. The company is owned 68% by Yara Auditor’s report areas mentioned, Yara has also focused on including, but not limited to, future re-assess- but controlled jointly with the other owner. Pension liabilities estimates related to expected credit loss on ment of useful lives of tangible and intangible The company has been classified as a joint Reconciliation of alternative The fair value of pension liabilities is cal- trade receivables and on inventory valuation. assets as well as assumptions used as basis operation because the partners have equal performance measures in the Yara Group culated based on several actuarial and Yara has not identified significant Covid-19 for impairment testing of such assets. number of board representatives and because economic assumptions. Any changes in the impact to these consolidated financial state- relevant activities that significantly affect the assumptions used would affect the estimated ments as of 31 December 2020. As of year-end 2020, any future financial im- return on the investment requires approval pension obligation. Changes in the discount pact to Yara of climate risks and opportunities of representatives from both partners. The rate have the most significant impact. The Financial implications of climate change is highly uncertain. same judgment have been made for the 50% discount rate and other key assumptions are Yara face significant risks and opportunities owned Yara Pilbara Nitrates and the 49% determined locally for each individual pension as a result of climate change and the gov- The risks and opportunities of climate change owned Tringen, also on the basis of required plan, based on the economic environment in ernmental accelerated and decisive actions reflected in these financial statements refers, consensus when making relevant decisions. which the plan is established. Assumptions to reduce greenhouse gas (GHG) emissions in all material respects, to the European See note 4.4 for further details on joint are normally reviewed annually when the and to create low-carbon and climate-resilient Green Deal, a set of policy initiatives by the operations. actuarial calculation is carried out, unless economies. These risks and opportunities are European Commission with the overarching there are significant changes during the year. integrated in the Group’s risk management aim of making Europe climate neutral in
121 Yara Integrated Report 2020 2 Results for the year
01 THIS IS YARA 2.1 Revenue from contracts with customers
Overview and accounting policies amounts potentially due to the customer. for as a separate performance obligation. analyzed to identify distinct goods or services 02 YEAR IN REVIEW A description of the nature of external reve- If the discount cannot be reliably estimat- This means that Yara allocates consideration that shall be accounted for as separate perfor- nues in the Yara Group can be found in note ed, revenue is reduced by the maximum to these freight/insurance services based mance obligations. 03 FROM THE BOARDROOM 2.3 Segment information. potential discount. Discount which qualify on known or estimated standalone selling as material rights are accounted for as prices, and recognizes the corresponding Urea sales in India 04 FINANCIAL STATEMENTS Under IFRS 15, Yara recognizes as revenue separate performance obligations. revenue over time to the extent the freight/ Yara’s India business manufactures and sells the agreed transaction price in a contract with insurance service is performed. However, the urea to dealers who sell to retailers who in turn Consolidated financial statements a customer at the time when the Group trans- Products are normally sold with standard timing effects are limited since the majority sell to farmers. Yara sells urea under a pricing Financial statements for fers the control of a distinct product or service warranties which provide protection to of deliveries to the customer’s location are scheme policy (as applicable from time to Yara International ASA to the customer. the customers that the product have the done within days. Shipping and handling time) issued by the Government of India (GoI). agreed-upon specifications. These stan- activities that occur before customers take This policy aims to promote balanced nutrient Statement from the Board and the The nature of Yara’s revenue recognition is dard warranties are accounted for using control of the goods are considered to be application and sustained agricultural growth by CEO of Yara International ASA categorized as follows: IAS 37 Provisions, Contingent Liabilities part of fulfilling the sale of the goods. making urea available to farmers across India at Auditor’s report and Contingent Assets. The Group does affordable prices on a timely basis. Reconciliation of alternative • Sale of fertilizer and chemical products not have any other significant obligations • Other products and services performance measures in Yara sells fertilizer and chemical products for returns or refunds. Other products and services include a number The price at which Yara can sell urea to regis- the Yara Group to customers worldwide. Ordinary purchase of different offerings including equipment tered dealers under the pricing scheme policy orders are normally the contracts with the The majority of sales in the Group have and services to store or handle product, (as applicable from time to time) is regulated, customer which create enforceable rights credit terms of less than 90 days. Nor- and technology offerings in the Industrial verified and determined by GoI. The price is and obligations. Revenue is recognized when mally customer contracts do not include a Solutions segment business units, such as generally less than the cost of production and control of the products is transferred to the significant financing component. Environmental Solutions. Revenues from sale GoI provides a compensation based on a pre- customer. This is normally determined by the of equipment are recognized upon delivery to defined method considering the sales price set incoterm used in the sales transactions. The Yara does not have significant incremental the customer. Revenues from sale of services by GoI to be charged to registered dealers. The use of incoterms varies between regions, costs of obtaining or fulfilling contracts are recognized over time as the service is per- cost for natural gas, other variable cost (includ- markets and customers, but products are with customers which the Group expects to formed. Revenues from technology offerings ing cost of bags and freight) and fixed cost. typically sold ex-warehouse. recover. in Yara’s Environmental Solutions Business are recognized over time using the percent- Control of goods transfers at the time the reg- Contracts with larger customers often • Freight/insurance services age of completion method if they meet the istered dealer receives the goods. The consider- include sales incentives leading to variable Yara arranges delivery to the customer’s criteria for over time recognition in IFRS 15. ation received is based on the dealer’s receipt of consideration amounts. Volume discounts location using different incoterms. When The percentage of completion method is an goods and constitutes of the fixed sales price to are the dominant sales incentives used by the Group uses incoterms which transfer the input method (based on costs incurred) and be paid by the registered dealer and the estimat- Yara. These discounts may have prospective responsibility for the goods to the cus- provides a faithful depiction of the transfer of ed compensation to be paid by GoI. As Yara has or retrospective effect. Volume discounts tomer before the freight/insurance service these offerings since it is reasonably possible the inventory risk and controls the goods until with retrospective effect are systematically is delivered (C-incoterms), Yara normally to estimate the stages of project comple- they are delivered to the registered dealers. The accrued and recognized as reduction of considers the freight/insurance service to be tion on an ongoing basis. Offerings which compensation from GoI is presented as revenue 122 revenue based on the best estimate of the a distinct service which shall be accounted represent multiple element arrangements are in the consolidated statement of income. Yara Integrated Report 2020 Disaggregation of external revenues by nature Disaggregation of external revenues by product group
Fertilizer and Freight/ Other chemical insurance products USD millions 2020 2019 USD millions products services and services Total
01 THIS IS YARA Ammonia 748 953 2020 Urea 2,420 2,713 Europe 02 YEAR IN REVIEW 2,783 102 39 2,924 Nitrate 1,726 1,862 Americas 4,401 154 7 4,562 NPK 3,816 4,139 03 FROM THE BOARDROOM Africa & Asia 1,803 33 9 1,845 CN 560 552 Global Plants & Operational UAN 282 300 04 FINANCIAL STATEMENTS Excellence 436 60 26 522 SSP 82 165 Industrial Solutions 1,392 134 193 1,719 DAP/MAP 240 263 Consolidated financial statements Other and Eliminations 5 - 14 19 MOP/SOP 430 540 Financial statements for Total 10,819 484 288 11,591 Yara International ASA Other fertilizer and chemical products 999 898 Other products and services 288 473 Statement from the Board and the 2019 Restated 1) Total revenues 11,591 12,858 CEO of Yara International ASA Europe 2,889 98 37 3,024 Auditor’s report Americas 4,991 184 7 5,182 Yara serves a large number of customers. No revenues from transactions with any single custom- Africa & Asia Reconciliation of alternative 1,843 38 1 1,881 er amount to ten percent or more of Yara’s total revenues. performance measures in Global Plants & Operational Excellence the Yara Group 588 65 24 677 Industrial Solutions 1,556 136 390 2,083 Other and Eliminations (2) - 13 11 Total 11,864 520 473 12,858
1) The 2019 segment figures have been restated according to the new segment structure. The Yara Group figures are unchanged.
123 Yara Integrated Report 2020 Disaggregation of external revenues by geographical area Customer contract balances and unsatisfied performance obligations The timing of revenue recognition, billings and cash collections results in billed trade receivables, Latin unbilled receivables (contract assets), and prepayments and deposits from customers (contract America North USD millions Europe Brazil ex. Brazil America Asia Africa Total liabilities). Information on billed trade receivables can be found in note 3.2. 01 THIS IS YARA Unbilled receivables (contract assets) are limited and refer mainly to technology offerings in Yara’s 2020 Environmental Solutions Business with revenue recognition over time in accordance with the 02 YEAR IN REVIEW Europe 2,826 2 11 1 39 46 2,924 percentage of completion method. For such offerings, billing generally occurs upon achievement Americas - 2,659 872 1,033 - - 4,565 of contractual milestones subsequent to revenue recognition. Contract assets are transferred to 03 FROM THE BOARDROOM Africa & Asia - - - - 1,342 503 1,845 receivables when Yara has an unconditional right to consideration.
04 FINANCIAL STATEMENTS Global Plants & Operational Excellence 42 79 29 192 180 - 522 Prepayments and deposits from customers (contract liabilities) mainly refer to Yara’s fertilizer sales in Brazil where prepayments up front of the fertilizer season is common practice to reduce Industrial Solutions 987 333 89 67 128 113 1,716 Consolidated financial statements price risk for the customers. Prepayments in Brazil are normally received less than 90 days be- Other and Eliminations 15 - - - 4 - 19 Financial statements for fore delivery of the goods. To a limited extent contract liabilities also refer to up-front payments Total 3,871 3,073 1,000 1,293 1,692 662 11,591 Yara International ASA on technology offerings in Yara’s Environmental Solutions Business. Statement from the Board and the 2019 Restated 1) Unsatisfied performance obligations refer mainly to technology deliveries in Yara’s Environmental CEO of Yara International ASA Europe 2,932 5 6 - 35 45 3,024 Solutions Business. For other deliveries unsatisfied performance obligations which are part of con- Auditor’s report tracts that have an expected value of one year or less are not disclosed. In addition, unsatisfied Americas 1 3,263 821 1,096 - - 5,182 performance obligations are not disclosed when Yara’s right to consideration corresponds directly Reconciliation of alternative Africa & Asia 1 - - - 1,333 547 1,881 performance measures in with the value to the customer of Yara’s performance completed to date. Global Plants & the Yara Group Operational Excellence 56 74 23 287 237 - 677 Industrial Solutions 1,257 323 97 98 181 126 2,083 Other and Eliminations 13 - - - (2) - 11 Total 4,259 3,665 948 1,482 1,785 718 12,858
1) The 2019 segment figures have been restated according to the new segment structure. The Yara Group figures are unchanged.
Revenues from external costumers of an amount of USD 213 million (2019: USD 234 million) are attributed to Norway (Yara’s country of domicile).
124 Yara Integrated Report 2020 USD millions 2020 2019 2.2 Other income
Accounting policies Contract assets A white certificate is an instrument issued by an authorized body guaranteeing that a specified Opening balance 01.01 38 42 amount of energy savings has been achieved. Yara receives such instruments from voluntarily 01 THIS IS YARA participating in the white certificate scheme in Italy. The white certificates under this scheme is Transferred to receivables in the period (35) (117) tradable and Yara sells these instruments to energy producers in the scheme on a running basis. Increase due to measure of progress in the period 22 113 02 YEAR IN REVIEW Yara recognizes the white certificates received at zero cost and recognizes a gain equal to the Revenue recognized in the period from performance obligations - - selling price once they are sold. satisfied in previous periods 03 FROM THE BOARDROOM Impairment - - Compensation from insurance companies is recognized in profit and loss when it becomes a 04 FINANCIAL STATEMENTS Currency translation effect 1 - receivable. The compensation becomes receivable when it is “virtually certain” that it will be Closing balance 31.12 26 38 received. Consolidated financial statements Please see separate notes referred to in the table below for the accounting for other specified Financial statements for Contract liabilities items. Yara International ASA Opening balance 01.01 399 343 Statement from the Board and the Share of opening balance recognized as revenue in the period (398) (319) USD millions Notes 2020 2019 CEO of Yara International ASA Cash received not recognized as revenue in the period 1) 369 376 Auditor’s report Currency translation effect 1 - Sale of white certificates 6 37 Closing balance 31.12 372 399 Reconciliation of alternative Insurance and other compensations 4 14 performance measures in Commodity based derivatives gain/loss 6.3 15 13 the Yara Group Unsatisfied performance obligations Sale of shares in equity-accounted investee 1) 100 - Initial contract price on signed contracts 555 621 Other 12 15 Aggregate contract revenue incurred to date 2) (516) (420) Total 137 78 Transaction price allocated to unsatisfied performance obligations 39 201 1) Of this amount, USD 97 relates to the sale of Yara’s share in QAFCO in 2020. See note 7.1 for more information.
Unsatisfied performance obligations to be recognized within 1 year 33 149 2-3 years 6 52 Transaction price allocated to unsatisfied performance obligations 39 201
1) Presented net of amounts created and released within the same reporting period. 2) Based on the percentage of completion method.
125 Yara Integrated Report 2020 2.3 Segment information position within ammonia production, trade its offerings and partly by the price develop- in Canada, the US, Trinidad, Colombia and and shipping. The new global unit will be ments for commodity fertilizer (urea, UAN), Brazil. Yara moved to a regional organizational reported as an additional, separate operating natural gas and ammonia. Yara also creates structure on 1 June 2020, and the Group’s op- segment from 2021. value through operational efficiency at its pro- The North America business unit operates a erations comprise of the following operating duction plants, competitive sourcing of raw wholly-owned plant in Belle Plaine, Canada 01 THIS IS YARA segments as of Year End 2020: Europe materials for production and optimal resource and also participates in the joint operations Yara Europe comprises sales, marketing and allocation across its business model. Oper- Trinidad Nitrogen Company Ltd. in Trinidad 02 YEAR IN REVIEW Europe production within Europe. Yara Europe mar- ating results are also impacted by currency and Yara Freeport LLC DBA Texas Ammo- Americas kets crop nutrition solutions to farmers and movements as margins are typically US dollar nia in the US (Yara consolidates its share 03 FROM THE BOARDROOM Africa & Asia the food value chain, offering crop nutrition exposed while fixed costs have a significant of assets, liabilities, revenues and costs for Global Plants & Operational Excellence products, advice and related services. The local currency component (mainly Euro). joint operations). A smaller portion of the 04 FINANCIAL STATEMENTS Industrial Solutions product portfolio is comprehensive, ranging urea and urea ammonium nitrate (UAN) from standard nitrogen-based fertilizer to Americas sales are sourced from third party produc- Consolidated financial statements In addition, Yara has established a new global specialty products. The largest product cate- Yara Americas comprises sales, marketing ers. In addition to crop nutrition solutions, function - Farming Solutions. This function Financial statements for gories sold within nitrogen-based fertilizer are and production within the regional business North America markets industrial application has a global mandate to drive the transfor- Yara International ASA nitrates and compound fertilizer (NPK). units of North America, Latin America and solutions such as waste water treatment and mation of Yara’s core crop nutrition business, Brazil. The segment markets a comprehen- additives for the construction industry and oil Statement from the Board and the developing both existing and new solu- Products sales are today mainly made spot to sive offering of crop nutrition solutions and field services. CEO of Yara International ASA tions including premium products, digital distributors based on ordinary purchase orders services including a broad product portfolio Auditor’s report business, food value chain collabora- and underlying frame agreements. Products are comprising nitrogen-based fertilizer and The Latin America business unit covers all tion and climate-neutral solutions. sold to a variety of customers covering whole- compound fertilizer (NPK) that contain all of Spanish-speaking markets in the Americas, Reconciliation of alternative performance measures in sale, co-operatives, retail, and to a lesser extent the three major plant nutrients: nitrogen (N), from Mexico in the North to Argentina in the The regional segments operate in a fully in- the Yara Group direct to farmers. The types of customers and phosphorus (P) and potassium (K) as well as South. In Colombia Yara owns a production tegrated setup, comprising production, supply products sold differ between regional markets, foliar and fertigation solutions through mi- facility in Cartagena which mainly serves the chain and commercial operations, producing and the off-take of product varies throughout cronutrients. The region also sells phosphate local Colombian market with compound fertil- and deliver existing Yara solutions in addition the fertilizer seasons in the different markets. and potash-based fertilizers which to a large izer (NPK) and calcium nitrate (CN) products. to commercializing and selling new offer- extent are sourced from third parties. The Cartagena facility also produces soluble ings under the guidance of Farming Solutions. Yara Europe has 11 fertilizer plants across ammonium nitrate to supply local customers. Europe. The plants have different product Product sales are today mainly made spot The operating segments presented are the portfolios and are located to serve both to distributors based on ordinary purchase The Brazil business unit operates more than 20 key components of Yara’s business as of domestic and export markets. In addition, orders and underlying frame agreements, blending units and distribution sites with a geo- Year End 2020 which have been assessed, the region operates more than 100 terminals but to an increasing extent the products are graphic spread to supply Brazil’s main agricul- monitored and managed on a regular basis and warehouses (owned and leased) and has also sold directly to farmers and co-opera- tural markets. It also includes the fully-owned by Yara’s Chief Executive Officer (CEO) as the a direct presence in around 30 European tives. The composition of customer groups production plants at Rio Grande, Ponta Grossa, Chief Operating Decision Maker. countries. The majority of products sold are and products sold differs between local and Cubatão, Paulínia, Salitre and Sumaré. produced at own sites in the region. regional markets, and the off-take of product On 9 February 2021 Yara announced that a varies with the fertilizer seasons in the Operating results in Yara Americas are largely new global unit had been established – Yara Operating results are driven by integrated different markets. Product sales are mainly driven by Yara’s ability to commercialize Clean Ammonia – to capture growth oppor- business value creation from plant to market. sourced from the operating segment Global crop nutrition solutions based on European tunities within carbon-free food solutions, The margin between realized finished fertil- Plants & Operational Excellence based on produced premium fertilizers at value-add- shipping fuel and other clean ammonia izer prices and raw material input prices is “arm’s length principle” transfer pricing, and ed margins, as well as the marketing of 126 applications, leveraging Yara’s unique existing partly driven by Yara’s ability to differentiate from the segment’s own production facilities own-produced products in the region. Other Yara Integrated Report 2020 key value drivers are reliability and opera- tary part to our crop nutrition distribution busi- of a potash resource in Dallol, Ethiopia, and the price level of the key input factors energy, tional efficiency at the production plants, ness, our fertilizer production comprehends Yara’s 25% share in Qatar Fertilizer Company phosphate rock and potash. Operating results competitive sourcing of raw materials for pro- one production facility in Australia producing (QAFCO) which was sold in the 3rd quarter can also be influenced by movements in duction (including natural gas), and efficient Ammonia and Technical Ammonium Nitrate 2020. In addition the unit includes the global currency exchange rates. blending of third-party sourced raw materi- (TAN) and one production facility at Babrala in planning and optimization function, the prod- 01 THIS IS YARA als. Operating results are also impacted by India producing ammonia and urea. The am- uct management function and the corporate Industrial Solutions currency movements, as margins are typically monia produced in Australia is commercialized Health, Environment, Safety and Quality Yara Industrial Solutions mainly provides 02 YEAR IN REVIEW US dollar exposed while fixed costs have a by Yara’s ammonia trade and shipping activity (HESQ) function. nitrogen based solutions and services across significant local currency component. within the operating segment Global Plants a wide range of industries including automo- 03 FROM THE BOARDROOM & Operational Excellence, while the technical Yara’s ammonia trade and shipping activ- tive, construction, waste handling and circular Africa & Asia ammonium nitrate (TAN) is commercialized by ity plays a vital role in Yara’s production economy, shipping, chemicals, mining and 04 FINANCIAL STATEMENTS Yara Africa & Asia comprises sales, market- the operating segment Industrial Solutions in system as it allocates excess volume from animal feed. There is a strong environmental ing, distribution and production of fertilizers the Australian mining market. The production producer plants and delivers to consumer focus to Yara Industrial Solutions and a large Consolidated financial statements and industrial products across Asia-Pacific, facility producing technical ammonium nitrate plants in a timely manner in order to ensure portion of revenue is derived from AdBlue, an Financial statements for Africa and Oceania regions. The segment (TAN) is a joint operation (Yara Pilbara Ni- full production capacity utilization. Besides urea-based reagent used by diesel vehicles Yara International ASA markets a comprehensive offering of crop nu- trates Pty Ltd.) in which Yara consolidates its significant intra-group purchases and sales, to reduce nitrogen oxide emissions. The trition solutions and services including a broad ownership share of 50% of assets, liabilities, Yara Ammonia Trade and shipping purchases segment also offers NO abatement solutions Statement from the Board and the x product portfolio comprising nitrogen-based revenues and costs. The ammonia produced ammonia from third parties predominantly to for industrial plants and transport at both land CEO of Yara International ASA fertilizer and compound fertilizers (NPK) at Babrala is used for the production of urea supply its European production region. It also and sea. In addition, Yara Industrial Solutions Auditor’s report designed for soil application. This portfolio is at the same plant. The urea produced at the generates significant external sales by selling is continuously working to develop product complemented by foliar and soluble products, plant is sold under a subsidized government ammonia to large customers in the fertilizer and service offerings in high growth markets Reconciliation of alternative performance measures in serving a different range of crop application. scheme in India. and chemical industries on a contract basis, as well as additional green and sustainable the Yara Group A significant part of the products marketed mainly in the Americas and Asia regions. It opportunities globally. are sourced from Yara production plants, both Operating results are highly influenced by the also provides optimized shipping solutions inside and outside the Africa & Asia region. Yara’s ability to commercialize our differenti- that fit Yara’s storage and port capacity, and Yara Industrial Solutions performs its activ- ated nitrate-based fertilizer portfolio and the which includes a fleet of own and time char- ities through five global commercial units; Most of the customers in the region are upgrading margins in the production facilities tered vessels. Transport Reagents, Mining Applications, smallholders farmers. Yara reaches these driven by the price levels of ammonia/Urea Base Chemicals, Industrial Nitrates and Yara customers through distributors, retailers and and competitive gas supply. Operating results The majority of sales in the segment are Marine Technologies. These commercial co-operatives based on different commercial can also be influenced by movements in group internal sales of finished fertilizers units are backed by six dedicated production agreements. The region also includes more currency rates. transferred at internal prices based on the plants across Europe, Latin America, Asia mature agricultural markets such as South arms lengths principle . The remaining exter- and Africa. In addition, the segment has Africa, Australia and New Zealand where Global Plants & Operational Excellence nal sales mainly relate to Yara’s global trade arm’s length commercial agreements with Yara often sells directly to professional large- The Global Plants & Operational Excel- and shipping of ammonia. the rest of Yara’s global production plant scale crop farmers. The type of customers lence segment operates Yara’s largest, and network and external suppliers. Through and product portfolio sold differs greatly export oriented, production plants (Pors- The Global Plants & Operational Excel- direct sales and distributors, Yara Industrial between the different markets. grunn, Sluiskil) and has a key role in driving lence unit operating results are highly influ- Solutions is able to provide its customers operational improvements, competence de- enced by volume output and margin develop- with high quality, reliable products and ser- The region has offices and operational units in velopment and technical project execution ment for fertilizer commodities. The margins vices backed by deep local knowledge com- more than 20 countries, with most significant across Yara’s production system. The unit are primarily driven by the difference in price bined with global best practice expertise. business operations in China, India, Thailand, also comprise Yara’s global ammonia trade levels for urea, diammonium phosphate fer- The customer contracts are to a large extent 127 South Africa and Australia. As a complemen- and shipping activity, Yara’s development tilizer (DAP) and potash-based fertilizer and medium to long-term contracts, however Yara Integrated Report 2020 products are also sold spot based on ordi- integrated position coupled with its diversi- segment eliminations which to a large extent lower volumes in stock and vica versa. A nary purchase orders. In some markets the fied exposure in terms of product, underlying refer to elimination of profit on inventory. In high EBITDA may also be explained by lower segment delivers equipment and services to industry and global location has allowed Yara addition it comprises corporate costs which internal margins on volumes in stock. In both store or handle products. Industrial Solutions to mitigate these effects are not allocated to operating segments. situations the internal eliminations will be 01 THIS IS YARA to a great extent. Fluctuations in EBITDA refer to volumes in less significant. Operating results are exposed to fluctuations stock and internal margins on these volumes 02 YEAR IN REVIEW in commodity prices and general economic Other and eliminations based on the arms lengths principle. High activity. However, Yara Industrial Solution’s Other and eliminations comprise cross- EBITDA in Other and eliminations refer to 03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS Consolidated statement of income
Consolidated financial statements 2019 2019 USD millions, except percentages 2020 Restated 1) USD millions, except percentages 2020 Restated 1) Financial statements for Yara International ASA External revenue from contract with customers Total revenue Statement from the Board and the Europe 2,924 3,024 Europe 3,455 3,595 CEO of Yara International ASA Americas 4,562 5,182 Americas 4,820 5,510 Auditor’s report Africa & Asia 1,845 1,881 Africa & Asia 2,234 2,251 Reconciliation of alternative Global Plants & Operational Excellence 522 677 Global Plants & Operational Excellence 2,440 2,863 performance measures in Industrial Solutions 1,719 2,083 Industrial Solutions 1,982 2,340 the Yara Group Other and Eliminations 19 11 Other and Eliminations (3,339) (3,702) Total 11,591 12,858 Total 11,591 12,858
Internal revenue Operating income 2) Europe 531 571 Europe 201 247 Americas 258 329 Americas 281 247 Africa & Asia 389 370 Africa & Asia 49 (8) Global Plants & Operational Excellence 1,918 2,186 Global Plants & Operational Excellence 477 365 Industrial Solutions 263 257 Industrial Solutions 234 193 Other and Eliminations (3,358) (3,713) Other and Eliminations (65) (55) Total - - Total 1,176 989
1) The 2019 segment figures have been restated according to the new regional segment structure. The Yara Group figures are unchanged. 2) See “Alternative performance measures” section for reconciliation of alternative performance measures in the Yara Group. ROIC, NOPAT and Invested Capital are calculated on a 12-month rolling average basis.
128 Yara Integrated Report 2020 2019 2019 USD millions, except percentages 2020 Restated 1) USD millions, except percentages 2020 Restated 1)
EBITDA 2) Net operating profit after tax (NOPAT)2) 01 THIS IS YARA Europe 477 512 Europe 157 196 Americas 563 574 Americas 260 238 02 YEAR IN REVIEW Africa & Asia 162 102 Africa & Asia 43 1 Global Plants & Operational Excellence 701 618 Global Plants & Operational Excellence 364 325 03 FROM THE BOARDROOM Industrial Solutions 344 301 Industrial Solutions 181 151 Other and Eliminations (23) (11) Other and Eliminations (30) (25) 04 FINANCIAL STATEMENTS Total 2,223 2,095 Yara 3) 976 886 Consolidated financial statements 2) 2) Financial statements for ROIC (12-month rolling average) Invested capital Yara International ASA Europe 6.6% 7.9% Europe 2,370 2,469 Statement from the Board and the Americas 6.4% 5.1% Americas 4,073 4,685 CEO of Yara International ASA Africa & Asia 2.0% 0.0% Africa & Asia 2,105 2,154 Auditor’s report Global Plants & Operational Excellence 14.5% 11.4% Global Plants & Operational Excellence 2,514 2,854 Industrial Solutions 17.2% 13.3% Industrial Solutions 1,051 1,134 Reconciliation of alternative Yara 3) 8.0% 6.6% 3) performance measures in Yara 12,200 13,395 the Yara Group 1) The 2019 segment figures have been restated according to the new regional segment structure. The Yara Group figures are unchanged. 2) See “Alternative performance measures” section for reconciliation of alternative performance measures in the Yara Group. ROIC, NOPAT and Invested Capital are calculated on a 12-month rolling average basis. 3) A normalized operating cash requirement is employed in the ROIC calculation for Yara, but not for the segments. This effect explains the variance in ROIC between Yara and the segments. See “Alternative performance measures” section for more information.
129 Yara Integrated Report 2020 Reconciliation of operating income to EBITDA Equity-accounted Interest income and Depreciation and Impairment USD millions Operating Income investees other financial income amortization 1) loss 2) EBITDA
2020 01 THIS IS YARA Europe 201 4 - 246 25 477
02 YEAR IN REVIEW Americas 281 5 53 221 3 563 Africa & Asia 49 - 2 110 2 162 03 FROM THE BOARDROOM Global Plants & Operational Excellence 477 6 - 218 - 701 Industrial Solutions 234 3 1 105 1 344 04 FINANCIAL STATEMENTS Other and Eliminations (65) 2 5 19 15 (23) Total 1,176 20 62 919 46 2,223 Consolidated financial statements
Financial statements for 2019 Restated 3) Yara International ASA Europe 247 5 - 232 27 512 Statement from the Board and the Americas 247 2 62 249 13 574 CEO of Yara International ASA Africa & Asia (8) - 3 105 3 102 Auditor’s report Global Plants & Operational Excellence 365 51 - 201 - 618 Reconciliation of alternative Industrial Solutions 193 2 1 104 - 301 performance measures in Other and Eliminations (55) 4 9 31 - (11) the Yara Group Total 989 65 76 923 43 2,095
1) Including amortization on excess value in equity-accounted investees. 2) Including impairment loss on excess value in equity-accounted investees. 3) The 2019 segment figures have been restated according to the new regional segment structure. The Yara Group figures are unchanged.
130 Yara Integrated Report 2020 Consolidated statement of financial position
2019 2019 USD millions 2020 Restated 1) USD millions 2020 Restated 1)
01 THIS IS YARA Total assets 2) Equity-accounted investees Europe 3,237 3,090 Europe 17 17 02 YEAR IN REVIEW Americas 5,246 5,922 Americas 51 46
03 FROM THE BOARDROOM Africa & Asia 2,563 2,536 Africa & Asia - - Global Plants & Operational Excellence 2,530 3,310 Global Plants & Operational Excellence 3) 3 878 04 FINANCIAL STATEMENTS Industrial Solutions 1,430 1,364 Industrial Solutions 41 38 Other and Eliminations 1,599 503 Other and Eliminations (6) (7) Consolidated financial statements Total 16,605 16,725 Total 108 970 Financial statements for Yara International ASA Current assets 2) Investments 4) Statement from the Board and the Europe 1,163 1,179 Europe 250 246 CEO of Yara International ASA Americas 1,658 1,941 Americas 280 510 Auditor’s report Africa & Asia 980 975 Africa & Asia 104 72 Reconciliation of alternative Global Plants & Operational Excellence 394 401 Global Plants & Operational Excellence 211 195 performance measures in Industrial Solutions 516 458 Industrial Solutions 73 70 the Yara Group Other and Eliminations 926 (169) Other and Eliminations 16 39 Total 5,637 4,785 Total 933 1,134
1) The 2019 segment figures have been restated according to the new regional segment structure. The Yara Group figures are unchanged. Non-current assets 2) 2) Assets excludes internal cash accounts and accounts receivable related to group relief. Europe 2,074 1,911 3) 2019 figure includes the investment of Qafco which was sold in 2020. Seenote 7.1 for more information. 4) Investments comprise property, plant and equipment, intangible assets, equity-accounted investees and other equity investments. Americas 3,588 3,981 The figures presented are capitalized amounts, and may deviate from cash flow from investing activities due to timing of cash outflows. Africa & Asia 1,583 1,561 Global Plants & Operational Excellence 2,136 2,910 Industrial Solutions 914 906 Other and Eliminations 673 671 Total 10,969 11,940
131 Yara Integrated Report 2020 Non-current assets for all segments by geographical location 2.5 Payroll and related costs Non-current assets 1)
USD millions 2020 2019 USD millions Notes 2020 2019
01 THIS IS YARA Europe 4,800 4,512 Payroll and related costs Brazil 1,636 1,928 02 YEAR IN REVIEW Salaries 8.2 (913) (922) Latin America ex. Brazil 333 361 Social security costs 8.2 (137) (146) 2) 03 FROM THE BOARDROOM Asia 1,557 2,405 Social benefits 8.2 (7) (8) North America 1,630 1,683 Net periodic pension cost 5.4, 5.6, 8.2 (79) (104) 04 FINANCIAL STATEMENTS Africa 287 289 Total (1,136) (1,180) Total 10,243 11,178 Consolidated financial statements 1) The identification of non-current assets and investments is based on location of operation. Excluded from non-current assets are financial Financial statements for instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts. Yara International ASA 2) 2019 figure includes the investment of Qafco which was sold in 2020. Seenote 7.1 for more information. 2.6 Other operating expenses Statement from the Board and the Non-current assets of an amount of USD 1,208 million (2019: USD 1,183 million) are attributed to CEO of Yara International ASA USD millions Notes 2020 2019 Norway (Yara’s country of domicile). Auditor’s report Other operating expenses Reconciliation of alternative Information related to disaggregation of external revenues by geographical area, nature and prod- Selling and administrative expense (223) (217) performance measures in uct group can be found in note 2.1 the Yara Group Advertising expense (28) (29) Travel expense (18) (47) 2.4 Raw materials, energy costs and freight expenses Fees auditors, lawyers, consultants 8.3 (97) (133) Other expenses (47) (34) USD millions Notes 2020 2019 Total (414) (460)
Raw material, energy costs and freight expenses Research costs 4.2 (91) (90) Raw material and energy costs (5,609) (6,968) Freight expense (899) (942) Other production related costs (1,311) (1,407) Total (7,819) (9,317)
132 Yara Integrated Report 2020 2.7 Financial income and expenses Specification
Accounting policies USD millions Notes 2020 2019 Interest income is recognized in the statement of income as it is accrued, based on the effective interest method. 01 THIS IS YARA Net interest income on customer credits 51 56
Dividends from investments are recognized in the statement of income when the Group has a Interest income, other 10 18 02 YEAR IN REVIEW right to receive the dividends. Dividends and net gain/(loss) on securities 1 2 Interest income and other financial income 62 76 03 FROM THE BOARDROOM Individual financial statements of Yara International ASA and its subsidiaries are prepared in the respective entities’ functional currency. Functional currency is the currency of the primary 04 FINANCIAL STATEMENTS Net foreign currency translation gain/(loss) 6.1 (243) (145) economic environment in which the entity operates. The functional currency of Yara International ASA is Norwegian kroner (NOK). In the individual financial statements, transactions in currencies Consolidated financial statements other than the entity’s functional currency are recognized by applying the exchange rate at the Interest expense (141) (197) Financial statements for date of transaction. At the balance sheet date, monetary items denominated in foreign currencies Interest expense on lease liabilities 4.5 (15) (15) Yara International ASA are translated using the exchange rate at that date. The changes in value due to such foreign cur- Capitalized interest 4.1 21 55 rency translations are recognized in the statement of income of the individual entity and reflected Net interest on net long-term employee benefit Statement from the Board and the 5.4 (5) (9) as “foreign currency translation gain/loss” in the consolidated statement of income for the Group. obligations CEO of Yara International ASA Other financial expense (25) (15) Auditor’s report Interest expense is recognized as it is accrued. Interest expense and other financial items (165) (182) Reconciliation of alternative performance measures in Capitalized interest expense refers to borrowing costs which are added to the cost of PP&E that Net financial income/(expense) (346) (251) the Yara Group take a substantial period of time to get ready for their intended use or sale (“qualifying assets”) if they are directly attributable to the acquisition, construction or production of such assets. The foreign currency translation loss this year of USD 243 million comprised a loss of USD 86 million on the US dollar denominated debt positions and a loss of USD 157 million on internal positions in other currencies than USD. In 2019, the US dollar debt positions and the internal positions contributed almost equally to the reported net loss of USD 145 million.
133 Yara Integrated Report 2020 2.8 Income taxes Group is able to control the reversal of the temporary difference and it is probable that the tempo- rary difference will not reverse in the foreseeable future. Deferred tax assets arising from deduct- Accounting policies ible temporary differences associated with such investments and interests, are recognized only to Income tax expense represents the sum of the tax currently payable and deferred tax. the extent it is probable that sufficient taxable profits are expected to reverse in the foreseeable future to utilize the benefits of the temporary differences. 01 THIS IS YARA The tax currently payable is based on taxable profit for the year. Current and deferred taxes are recognized as expense or income in the statement of income, 02 YEAR IN REVIEW Deferred tax is recognized on differences between the carrying amounts of assets and liabilities except when they relate to items recognized directly in equity or in other comprehensive income. in the financial statements and the corresponding tax base used in the computation of taxable If the tax relates to items recognized in other comprehensive income or directly in equity, the tax 03 FROM THE BOARDROOM profit. It is accounted for by using the liability method. Deferred tax liabilities are generally recog- is also recognized as other comprehensive income or directly in equity. Uncertain tax positions, nized for all taxable temporary differences. Deferred tax assets are generally recognized for all for example from unresolved disputes with tax authorities, are provided for if there are probable 04 FINANCIAL STATEMENTS deductible temporary differences, carry forward of unused tax credits, and any unused tax losses. cash outflows. In certain cases, it may be unclear how tax law applies to a particular transaction However, deferred tax assets are recognized only to the extent these can be utilized against prob- or circumstance until the relevant taxation authority or court takes a decision in the future. Con- Consolidated financial statements able taxable profits. sequently, this may affect tax assets or liabilities. When assessing whether uncertainty over tax Financial statements for treatments exists Yara will consider current tax law and regulations, general practice, decisions Yara International ASA Deferred tax assets and liabilities are not recognized if the temporary difference arises from and rulings by the court or other relevant authorities as well as tax memorandum prepared by goodwill, or from the initial recognition of other assets and liabilities in a transaction (other than in internal or external experts. In case of uncertain tax treatments Yara will consider the probability Statement from the Board and the a business combination) that affects neither the taxable profit nor the accounting profit. that a taxation authority will accept an uncertain tax treatment. When concluding that it is not CEO of Yara International ASA probable that the taxation authority will accept an uncertain tax treatment, Yara will reflect the Auditor’s report Deferred tax liabilities are recognized for taxable temporary differences associated with invest- effect of uncertainty by using the method that provides better prediction resolution of uncertainty. Reconciliation of alternative ments in subsidiaries, associates and interests in jointly controlled entities, except where the performance measures in the Yara Group
134 Yara Integrated Report 2020 The major components of income tax expense for the year ended 31 December: Taxable income differs from net income before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in future years (temporary
USD millions 2020 2019 differences). It also excludes items that are never taxable or deductible (permanent differences). The Group’s liability for current tax is calculated using tax rates that have been enacted or sub- stantively enacted by the balance sheet date. 01 THIS IS YARA CONSOLIDATED STATEMENT OF INCOME Current taxes 02 YEAR IN REVIEW Current year (121) (224) Prior year adjustment 1) 19 (40) 03 FROM THE BOARDROOM Total (102) (264)
04 FINANCIAL STATEMENTS Deferred taxes Deferred tax income/(expense) recognized in the current year (17) 67 Consolidated financial statements Adjustments to deferred tax attributable to changes in tax rates and laws (12) 1 Financial statements for (Write-downs)/reversal of previous write-downs of deferred tax assets (28) (18) Yara International ASA Total (58) 50 Total tax income/(expense) recognized in statement of consolidated income (160) (214) Statement from the Board and the CEO of Yara International ASA OTHER COMPREHENSIVE INCOME Auditor’s report Current tax Reconciliation of alternative Hedge of net investment (5) 3 performance measures in Total current tax (5) 3 the Yara Group Deferred tax Pensions 16 5 Available-for-sale financial assets (1) - Total 15 5
Total tax income/(expense) recognized directly in other comprehensive income 10 8
Total tax income/(expense) recognized in comprehensive income (150) (207)
1) Includes a provision for an incentive arrangement in the United states of USD 24 million. 2019 figure includes a tax provision of USD (38) million which was based on a court ruling.
135 Yara Integrated Report 2020 Reconciliation of Norwegian nominal statutory tax rate to effective tax rate
USD millions, except percentages 2020 2020 2019 2019
01 THIS IS YARA Income before tax 850 803
02 YEAR IN REVIEW Expected income taxes at statutory tax rate 1) 22% (187) 22% (177)
03 FROM THE BOARDROOM Tax law changes 1.6% (13) (0.2%) 1 Foreign tax rate differences (2.5%) 21 (2.6%) 21 04 FINANCIAL STATEMENTS Unused tax losses and tax offsets not recognized as deferred tax assets 11.9% (101) 5.3% (43) Consolidated financial statements Previously unrecognized and unused tax losses and deductible temporary differences now recognized as deferred tax assets (4.0%) 34 (1.9%) 15 Financial statements for 2) Yara International ASA Deductible loss (4.8%) 41 - - Non-taxable gain on sale equity-accounted investees 3) (2.9%) 24 - - Statement from the Board and the CEO of Yara International ASA Non-deductible expenses 1.8% (15) 1.3% (11) Share of net income equity-accounted investees (0.3%) 3 (1.7%) 13 Auditor’s report Tax free income miscellaneous (1.3%) 11 (2.3%) 22 Reconciliation of alternative Prior year adjustment 4) (2.2%) 19 5.1% (41) performance measures in the Yara Group Withholding tax 1.7% (15) 2.5% (7) Other, net (2.1%) 18 (0.9%) (9) Total income tax income/(expense) (160) (214)
Effective tax rate 18.9% 26.7%
1) Calculated as Norwegian nominal statutory tax rate of 22% (2019: 22%) applied to income before tax. 2) Related to loss from restructuring corporate holding structure. 3) Gain is related to the sale of Qafco in 2020. See note 7.1 for more information. 4) The 2020 figure includes a special tax incentive impact of USD 24 million. The 2019 figure includes a provision of USD (38) million following a court ruling in an ongoing tax case.
136 Yara Integrated Report 2020 Specification of deferred tax assets/(liabilities) Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that the extent that it is no longer probable that sufficient taxable profits will be available to allow all have been enacted or substantively enacted by the balance sheet date. The measurement of de- or part of the asset to be recovered. ferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its 01 THIS IS YARA assets and liabilities.
02 YEAR IN REVIEW
2020 03 FROM THE BOARDROOM Recognized in other Foreign Opening Charged Changes in comprehensive Acquisitions/ currency Closing 04 FINANCIAL STATEMENTS USD millions balance to income tax rate income disposals translation balance
Consolidated financial statements Non-current items Financial statements for Intangible assets (13) 4 (1) - - 5 (6) Yara International ASA Property, plant and equipment (431) 32 (1) - - (12) (411) Statement from the Board and the Pensions 96 (6) (6) 16 - 15 115 CEO of Yara International ASA Equity securities available-for-sale 1 - - (1) - - - Auditor’s report Other non-current assets (103) (40) - - - 4 (140) Reconciliation of alternative Other non-current liabilities and accruals 136 (64) (1) - - (3) 68 performance measures in Total (315) (74) (9) 15 - 8 (373) the Yara Group Current items Inventory valuation 52 (11) (2) - - (1) 39 Accrued expenses 31 45 (1) - - (3) 73 Assets classified as held for sale 1 (1) - - - - - Total 84 33 (3) - - (4) 111
Tax loss carry forwards 612 5 - - - 30 646 Unused tax credits 4 18 - - - 2 25 Valuation allowance (319) (28) (1) - 1 35 (312) Net deferred tax asset/(liability) 66 (46) (12) 15 1 72 97
137 Yara Integrated Report 2020 2019 Recognized in other Foreign Opening Charged Changes in comprehensive Acquisitions/ currency Closing USD millions balance to income tax rate income disposals translation balance
01 THIS IS YARA Non-current items 02 YEAR IN REVIEW Intangible assets (7) (5) 1 - (2) - (13) Property, plant and equipment (394) (25) (2) - (4) (6) (431) 03 FROM THE BOARDROOM Pensions 93 (2) (2) 5 - 2 96 Equity securities available-for-sale ------1 04 FINANCIAL STATEMENTS Other non-current assets (156) 53 1 - (3) 2 (103) Other non-current liabilities and accruals 115 23 (1) - - (1) 136 Consolidated financial statements Total (348) 43 (3) 5 (9) (2) (315) Financial statements for Yara International ASA Current items Statement from the Board and the Inventory valuation 30 24 (2) - - - 52 CEO of Yara International ASA Accrued expenses 41 (3) (6) - - - 31 Auditor’s report Assets classified as held for sale - 1 - - - - 1 Reconciliation of alternative Total 71 21 (8) - - - 84 performance measures in the Yara Group Tax loss carry forwards 582 3 1 - - 26 612 Unused tax credits 5 (1) - - - - 4 Valuation allowance (320) (18) 12 - - 7 (319) Net deferred tax asset/(liability) (9) 48 1 5 (9) 30 67
138 Yara Integrated Report 2020 Unrecognized deferred tax assets Yara’s recognized tax loss carry forward primarily relate to the business in Norway and Australia, where tax losses are without expiration. The tax losses are mainly related to incurred currency
USD millions 2020 2019 losses, non-recurring transactions and loss from operations. The recognized tax assets for all units are all supported by estimated future profit level.
01 THIS IS YARA Unrecognized deferred tax assets are attributable to the following Deferred tax presented in the statement of financial position Tax losses 281 261 02 YEAR IN REVIEW Deductible temporary differences 31 58 USD millions 2020 2019 Total 312 319 03 FROM THE BOARDROOM Deferred tax assets 485 484 Unrecognized tax losses are mainly related to the tax loss carry forwards arising from the activi- 04 FINANCIAL STATEMENTS Deferred tax liabilities (388) (416) ties in Brazil and France. Utilization of the tax loss carry forwards in Brazil and France is without time limitation. In Brazil utilization is restricted to 30% of taxable income each year. Unrecog- Net deferred tax asset/(liability) 97 67 Consolidated financial statements nized tax losses in Brazil is USD 133 million (2019: USD 173 million). The decrease is mainly relat- Financial statements for ed to currency effect and loss on tax positions following a legal merger. Unrecognized tax losses Undistributed earnings of foreign subsidiaries and in foreign associates and joint arrangements is Yara International ASA in France is USD 63 million in 2020 (2019: 0). amounting to approximately USD 8.1 billion that for the main part can be distributed as tax-free dividends. For the expected part of dividend that cannot be distributed as tax-free income, a de- Statement from the Board and the CEO of Yara International ASA Specification of expiration of tax loss carry forwards ferred tax liability of USD 7 million is recognized.
Auditor’s report For information regarding tax contingencies and uncertain tax treatments, see note 5.6. Reconciliation of alternative USD millions 2020 performance measures in the Yara Group 2021 23 2022 21 2023 14 2024 7 2025 9 After 2025 102 Without expiration 2,217 Total tax loss carry forwards 2,393
Deferred tax effect of tax loss carry forwards 646 Valuation allowance on tax loss carry forwards (281) Recognized in the statement of financial position 365
139 Yara Integrated Report 2020 3 Current assets
3.1 Inventories All amounts presented are net of write-downs. A write-down is recognized for the amount by 01 THIS IS YARA which the carrying amount exceeds its net realizable value. Overview 02 YEAR IN REVIEW Inventories comprise finished goods, work in progress, raw materials and spare parts. Finished The cost of inventories comprises all costs of purchase, cost of conversion and other costs in- goods refer to own produced products and goods purchased for resale. Work in progress are curred in bringing the inventories to their present location and condition. This include direct mate- partly processed, unfinished products. Raw materials include own produced raw materials, mainly 03 FROM THE BOARDROOM rials, direct labor, and an appropriate portion of production overhead, or the purchase price of the ammonia and nitric acids, as well as raw materials purchased from external parties such as inventory. Yara is using the standard costing method for cost measurement which consider normal phosphate, potassium and other input factors used in the production. Spare parts include packing, 04 FINANCIAL STATEMENTS levels of materials and supplies, labor, efficiency and capacity utilization. operating and maintenance supplies. Inventories in stock in the Industrial Solutions segment com- prises, in addition, environmental solutions, scrubbers for the maritime industry, feed phosphates, Spare parts held as inventories are spare parts which do not meet the criteria for being classified Consolidated financial statements chemicals and other. as Property, plant and equipment (PP&E). Financial statements for Yara International ASA Accounting policies Yara has internal sales between the different segments. These sales create internal margins Statement from the Board and the Inventories are stated at the lower of cost, using weighted average, and net realizable value. Net which are eliminated and presented as “other and eliminations”. CEO of Yara International ASA realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and other selling costs. Auditor’s report Reconciliation of alternative performance measures in Inventory stock 2020 the Yara Group Global Plants & Operational Other and USD millions Europe Americas Africa & Asia Excellence Industrial Solutions Eliminations Total
31 Dec 2020 Finished goods 429 359 279 72 74 (88) 1,125 Work in progress 20 - 1 12 8 - 41 Raw materials 85 493 22 53 43 1 696 Spare parts 95 58 27 73 47 - 299 Total 31 Dec 2020 628 910 329 209 172 (87) 2,161
140 Yara Integrated Report 2020 Inventory stock 2019 Global Plants & Operational Other and USD millions Europe Americas Africa & Asia Excellence Industrial Solutions Eliminations Total
01 THIS IS YARA 31 Dec 2019 Finished goods 502 435 337 58 91 (111) 1,312 02 YEAR IN REVIEW Work in progress 19 2 1 15 11 - 47 Raw materials 86 518 15 67 47 - 733 03 FROM THE BOARDROOM Spare parts 82 60 24 65 36 - 267 Total 31 Dec 2019 689 1,014 378 204 185 (111) 2,360 04 FINANCIAL STATEMENTS
Consolidated financial statements Write-down 2020 Global Plants Financial statements for & Operational Other and Yara International ASA USD millions Europe Americas Africa & Asia Excellence Industrial Solutions Eliminations Total Statement from the Board and the CEO of Yara International ASA Balance at 1 January (12) (11) (3) (1) (10) 7 (30) Auditor’s report New write-downs recognized during the year (17) (10) (5) (2) (2) 11 (24) Write-downs reversed due to product sold 1 5 (1) 2 (1) (19) (12) Reconciliation of alternative performance measures in Write-downs reversed, other 16 10 5 - 5 2 39 the Yara Group Foreign currency translation gain/(loss) (1) 1 - - (1) - (1) Balance at 31 December (12) (6) (3) (1) (7) 2 (28)
Write-down 2019 Global Plants & Operational Other and USD millions Europe Americas Africa & Asia Excellence Industrial Solutions Eliminations Total
Balance at 1 January (8) (3) (7) - (11) 5 (24) New write-downs recognized during the year (15) (19) (7) (4) (12) 18 (39) Write-downs reversed due to product sold 5 4 9 3 6 (16) 11 Write-downs reversed, other 5 8 3 - 7 - 23 Foreign currency translation gain/(loss) ------Balance at 31 December (12) (11) (3) (1) (10) 7 (30)
No inventories were pledged as security at end of 2020 or 2019.
141 Yara Integrated Report 2020 3.2 Trade receivables Movement in allowance for expected credit loss
Accounting policies USD millions Notes 2020 2019 Trade receivables are initially recognized at the agreed transaction price in the contract with the customer. Subsequently they are measured at amortized costs using the effective interest meth- 01 THIS IS YARA od. Short-term receivables are normally not discounted. Balance at 1 January (101) (106) Lifetime expected credit losses recognized for (24) (14) existing business 02 YEAR IN REVIEW In accordance with the expected loss model, Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach). The calculation of expected credit loss (ECL) Amounts written off as uncollectible 13 6 03 FROM THE BOARDROOM is based on both historical and forward looking information, and is done on local unit level. When Lifetime expected credit losses reversed 11 10 calculating ECL for trade receivables not yet due and trade receivables less than 90 days overdue, Foreign currency translation 7 2 04 FINANCIAL STATEMENTS the last five years historical loss percentage is used as base amount for allowance. Forward Other changes - 1 looking information is taken into account by assessing available information on local unit level Balance at 31 December (94) (101) Consolidated financial statements which could indicate an expected future loss that is higher or lower than the experience, including regional macroeconomic information. Calculation of ECL for trade receivables more than 90 days Financial statements for overdue is based on a separate, individual assessment of each receivable. Yara International ASA Statement from the Board and the A receivable is considered to be in default when it is overdue and enforcement activities have CEO of Yara International ASA started. If there is a reasonable expectation that enforcement activities will not lead to recovery, Auditor’s report the receivable is credit impaired. The receivable is written off when enforcement activities lead to objective evidence of the receivable being irrecoverable. Reconciliation of alternative performance measures in Specification the Yara Group
USD millions Notes 2020 2019
Trade receivables 1,572 1,664 Allowance for expected loss (94) (101) Total ¹) 6.3 1,478 1,564
1) Of the total balance of USD 1,478 million approximately 709 million (USD 752 million in 2019) refers to credit insured receivables.
142 Yara Integrated Report 2020 Ageing analysis of trade receivables at 31 December
Gross trade receivables Past due gross trade receivables 01 THIS IS YARA Not past due gross USD millions Total trade receivables < 30 days 30 - 90 days 91 - 180 days > 180 days 02 YEAR IN REVIEW
2020 1,572 1,260 123 51 28 108 03 FROM THE BOARDROOM 2019 1,664 1,315 138 59 27 125
04 FINANCIAL STATEMENTS Impairment of trade receivables Consolidated financial statements Impairment on past due receivables Financial statements for Yara International ASA Impairment on not USD millions Total past due receivables < 30 days 30 - 90 days 91 - 180 days > 180 days Statement from the Board and the CEO of Yara International ASA 2020 (94) (7) (2) (2) (9) (75) Auditor’s report 2019 (101) (3) (1) (3) (2) (92) Reconciliation of alternative performance measures in the Yara Group Net trade receivables Past due but not impaired
Neither past USD millions Total due nor impaired < 30 days 30 - 90 days 91 - 180 days > 180 days
2020 1,478 1,253 122 50 20 34 2019 1,564 1,313 137 55 25 32
143 Yara Integrated Report 2020 3.3 Prepaid expenses and other current assets 3.4 Cash and cash equivalents
Accounting policies Accounting policies Other short-term receivables, loans and deposits are initially recognized at fair value. Subsequent- Cash and cash equivalents include bank deposits and monetary items which are due in less than ly they are measured at amortized cost using the effective interest method. Short-term items are three months. They are initially recognized at fair value and subsequently measured at amortized 01 THIS IS YARA normally not discounted. cost using the effective interest method. However they are normally not discounted as they are short-term items. On deposits, Yara records a 12-month’s expected credit loss if there has not 02 YEAR IN REVIEW On other receivables, loans and deposits, Yara records 12-months expected credit losses if there been any significant increase in credit risk since initial recognition (the general approach). has not been any significant increase in credit risk since initial recognition (the general approach). 03 FROM THE BOARDROOM Please see note 4.6 Other non-current assets for more information. Specification
04 FINANCIAL STATEMENTS Specification USD millions Notes 2020 2019
Consolidated financial statements USD millions Notes 2020 2019 Cash and cash equivalents 6.3 1,363 300 Financial statements for Yara International ASA Financial assets: Statement from the Board and the Foreign exchange contracts 6.1 2 - Expected credit loss provision on bank deposits is USD 2.5 million (2019: USD 0.9 million). CEO of Yara International ASA Receivables and deposits 6.3 141 138 External bank deposits that are not available for use by the group at 31 December 2020 have Auditor’s report Contracts assets 2.1 26 38 a carrying value of USD 32 million (2019: USD 35 million), mainly related to cash held by joint Expected credit loss on other current assets 6.3 (1) (1) Reconciliation of alternative operations. More information about bank deposits and dividend resolutions in subsidiaries with performance measures in Total financial instruments 169 176 significant non-controlling interests is provided innote 5.2 Non-controlling interests. the Yara Group Non-financial assets: The average interest rate for liquid assets is approximately 0.4% as of 31 December 2020 (2019: VAT and sales related taxes 4.6 141 123 1.7%). Prepaid income taxes 164 63 Yara minimizes its counterparty exposure by keeping its cash deposits in various Nordic and inter- Prepaid expenses 156 192 national banks with established limits for exposure towards each institution. Total non-financial assets 461 377
Total 6.3 630 553
144 Yara Integrated Report 2020 4 Investments in non-current assets
4.1 Property, plant and equipment Gain or loss due to sale or retirement of PP&E is calculated as the difference between sales pro- 01 THIS IS YARA ceeds and the carrying value, and is recognized in the statement of income. Overview 02 YEAR IN REVIEW Property, plant and equipment (PP&E) mainly refers to Yara’s fertilizer production plants across An impairment is recognized if an asset’s carrying value is higher than the recoverable amount. the world, and which hold assets such as land, buildings, machinery, equipment and periodic Non-current assets other than goodwill are tested for impairment whenever events or changes in maintenance. In addition, they hold investments in self-constructed assets not yet in use and 03 FROM THE BOARDROOM circumstances indicate that such carrying amounts may not be recoverable. Please see note 4.7 which are categorized as assets under construction. The remaining PP&E refers to assets for Impairment of non-current assets. distribution of fertilizer products, which mainly consists of buildings, machinery and equipment for 04 FINANCIAL STATEMENTS bagging and blending of products, as well as terminals and warehouses. Costs related to periodic maintenance of plants (“turnarounds”) and recurring investments to extend the current plant performance for a longer period of time, are recognized as assets and de- Consolidated financial statements Accounting polices preciated on a systematic basis until the next periodic maintenance if cycle is more than one year Financial statements for An item of property, plant and equipment is recognized at cost if it is probable that the item will on average. Major replacements and renewals are capitalized and depreciated separately based Yara International ASA generate future economic benefits for Yara and the cost can be measured reliably. The carrying on their specific useful lives. Replaced assets are derecognized. Most of the remaining repair and Statement from the Board and the value of PP&E is comprised of the historical cost less accumulated depreciation and any impair- maintenance costs are expensed as incurred. CEO of Yara International ASA ment loss. If a legal or constructive obligation exists to decommission PP&E, the carrying value of the assets are increased with the discounted value of such obligations. Borrowing costs are Removal of mine waste materials (“stripping costs”) in the production phase of existing mines Auditor’s report added to the cost of assets that take a substantial period of time to get ready for their intended are capitalized as a component of existing tangible mine assets when the activity gives improved Reconciliation of alternative use or sale (“qualifying assets”) if they are directly attributable to the acquisition, construction or access to ore. Stripping activity assets are depreciated on a straight-line basis over the useful lives performance measures in production of such assets. of the underlying mine assets. the Yara Group Depreciation of an asset begins when it is available for use. An asset is available for use when the Capitalization of investments as self-constructed PP&E start when defined decision gates are asset is in the location and condition necessary for it to be capable of operating in the manner in- met. These investments are then categorized as assets under construction until they are ready for tended by management. Decommissioning obligations and borrowing costs added to the carrying use as intended by management. Once they are ready for use they are transferred to the applica- amount of PP&E are depreciated over the useful life of the respective PP&E. ble classes of PP&E and depreciation starts.
PP&E are depreciated on a straight-line basis over their expected useful life. Individual parts of Government grants are recognized in the consolidated financial statement when the Group has PP&E with different useful lives are accounted for and depreciated separately. Expected useful reasonable assurance that it will comply with conditions attached to them and the grants will be lives and residual values are, unless immaterial, re-assessed annually. received. Government grants that compensate the Group for the cost of an asset are deducted in the carrying amount of the asset, and recognized in the statement of income on a systematic basis over the useful life of the asset as a reduction to depreciation expense.
145 Yara Integrated Report 2020 2020 Machinery and Periodic Asset under USD millions, except percentages and year Land Buildings equipment maintenance construction Vessels Other Total
Cost 01 THIS IS YARA Balance at 1 January 309 2,466 10,117 481 1,660 280 72 15,384
02 YEAR IN REVIEW Addition at cost 1 109 253 70 461 - 18 912 Derecognition - (10) (156) (51) (6) - - (223) 03 FROM THE BOARDROOM Other transfers 1) - 111 175 12 (296) - - 3 Foreign currency translation (30) 3 476 26 (219) - 8 264 04 FINANCIAL STATEMENTS Balance at 31 December 280 2,680 10,863 540 1,600 280 97 16,340 - Consolidated financial statements Depreciation and impairment - Financial statements for Balance at 1 January (6) (948) (5,476) (250) (10) (48) (32) (6,770) Yara International ASA Depreciation - (97) (550) (84) - (13) (4) (748) Statement from the Board and the Impairment loss 2) (3) (9) (14) (2) (1) - - (29) CEO of Yara International ASA Derecognition - 7 108 50 - - - 166 Auditor’s report Other transfers - (3) (3) - - - - (6) Reconciliation of alternative Foreign currency translation (1) (21) (332) (16) - - (3) (373) performance measures in Balance at 31 December (11) (1,070) (6,266) (301) (12) (61) (40) (7,760) the Yara Group
Carrying value Balance at 1 January 303 1,517 4,641 231 1,650 232 40 8,614 Balance at 31 December 269 1,609 4,597 238 1,588 219 57 8,579
Useful life in years Indefinite 10 - 60 2 - 40 2 - 5 20 5 - 25 Depreciation rate 2 - 6% 3 - 50% 15-50% 5% 5 - 20%
1) Includes mainly transfers from assets under construction to other categories of PP&E due to completion of construction projects, which is netted off to 0 at total. 2) Please see note 4.7 Impairment of non-current assets.
146 Yara Integrated Report 2020 Main changes in 2020 Borrowing costs The largest additions to PP&E include construction of a new plant in Serra do Salitre and an The amount of borrowing cost capitalized amounted to USD 21 million in 2020 (2019: USD 55 expansion and modernization of the Rio Grande plant (Brazil), both projects continuing from 2019, million). The average rate for the borrowing cost capitalized was 3.45% in 2020. and turnaround activities for one of the ammonia plants in Sluiskil. Compensations 01 THIS IS YARA The largest transfer from assets under construction to other categories of PP&E refer to complet- Insurance compensations on PP&E recognized in the consolidated statement of income amounted ed assets in construction projects related to modernization of the Rio Grande plant and comple- to USD 1 million in 2020 (2019: USD 3 million). 02 YEAR IN REVIEW tion of rectification works on a technical ammonium nitrate plant in Pilbara region of Australia. Contractual commitments 03 FROM THE BOARDROOM Assets used as security Please find information on contractual obligations on PP&E in note 4.8 Committed future invest- PP&E pledged as security was USD 29 million in 2020 (2019: USD 27 million). ments. 04 FINANCIAL STATEMENTS Government grants Consolidated financial statements Government grants related to assets have been recognized as deduction to the carrying value by Financial statements for reducing “Addition at cost” with USD 13 million in 2020 (2019: USD 12 million). Yara International ASA Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
147 Yara Integrated Report 2020 2019
Machinery and Periodic Asset under USD millions, except percentages and year Land Buildings equipment maintenance construction Vessels Other Total
01 THIS IS YARA Cost Balance at 1 January 321 2,245 9,730 486 1,591 280 73 14,726 02 YEAR IN REVIEW Addition at cost - 103 254 61 718 - 3 1,138
03 FROM THE BOARDROOM Derecognition (1) (20) (132) (76) (16) - (3) (249) Transfers to asset held for sale (2) (5) (3) - - - - (11) 04 FINANCIAL STATEMENTS Other transfers 1) - 167 333 17 (576) - - (59) Foreign currency translation (8) (23) (64) (8) (56) - (2) (161) Consolidated financial statements Balance at 31 December 309 2,466 10,117 481 1,660 280 72 15,384 Financial statements for - Yara International ASA Depreciation and impairment - Statement from the Board and the Balance at 1 January (6) (889) (5,085) (239) (10) (35) (32) (6,296) CEO of Yara International ASA Depreciation - (92) (569) (87) - (13) (4) (765) Auditor’s report Impairment loss 2) - (5) (8) (4) (1) - - (18) Reconciliation of alternative Reversed impairment - - 3 - - - - 3 performance measures in Derecognition - 17 101 65 - - 4 187 the Yara Group Transfers to asset held for sale - 4 2 - - - - 5 Other transfers 3) - 5 30 - 1 - - 37 Foreign currency translation - 12 50 15 - - 1 77 Balance at 31 December (6) (948) (5,476) (250) (10) (48) (32) (6,770)
Carrying value Balance at 1 January 315 1,356 4,645 248 1,581 245 41 8,430 Balance at 31 December 303 1,517 4,641 231 1,650 232 40 8,614
Useful life in years Indefinite 10 - 60 2 - 40 2 - 5 20 5 - 25 Depreciation rate 2 - 6% 3 - 50% 15-50% 5% 5 - 20%
1) Includes mainly transfers from assets under construction to other categories of PP&E due to completion of construction projects, which is netted off to 0 at total. The total balance refers to transfers from PP&E to other accounts. Of the balance, USD (62) million was transferred to Leases per IFRS 16 implementation. Please see note 4.5 Leases for more information. 2) Please see note 4.7 Impairment of non-current assets. 3) Total balance relates to transfers to Leases per IFRS 16 implementation. Please see note 4.5 Leases for more information.
148 Yara Integrated Report 2020 Main changes in 2019 Intangible assets other than goodwill are tested for impairment whenever events or changes in The main additions to assets under construction refers to construction of a new plant in Serra do circumstances indicate that such carrying amounts may not be recoverable. Intangible assets not Salitre (Brazil) and an expansion and modernization of the Rio Grande plant (Brazil). ready for its intended use are also tested for impairment annually. Please see note 4.7 Impair- ment of non-current assets. The largest transfers from assets under construction to other categories of PP&E refer to con- 01 THIS IS YARA struction projects related to the production of nitric acid in Köping in Sweden and an ammonia Expenditures on research activities are expensed in the period in which they incur. An internal- tank in Tertre in Belgium. ly-generated intangible asset arising from development is recognized if, an only if, all of the 02 YEAR IN REVIEW following have been demonstrated;
03 FROM THE BOARDROOM 4.2 Intangible assets • The technical feasibility of completing the intangible asset so that it will be available for use or sale Accounting Policies • The intention to complete the intangible asset and use or sell it 04 FINANCIAL STATEMENTS Intangible assets with finite useful lives, and that are acquired separately, are carried at cost less • The ability to use or sell the intangible asset accumulated amortization and accumulated impairment losses. Amortization is recognized on a • How the intangible asset will generate probable future economic benefits Consolidated financial statements straight-line basis over their estimated useful lives. The estimated useful life and amortization • The availability of adequate technical, financial and other resources to complete the development Financial statements for method are reviewed at the end of each reporting period. The effect of any changes in estimate and to use or sell the intangible asset Yara International ASA is accounted for on a prospective basis. Intangible assets with indefinite useful lives, and that are • Its ability to measure reliably the expenditure attributable to the intangible asset during its development Statement from the Board and the acquired separately, are carried at cost less accumulated impairment losses. CEO of Yara International ASA Goodwill is initially measured at cost being the excess of the aggregate of the consideration Where no internally-generated intangible asset can be recognized, development expenditures are Auditor’s report transferred, the amount recognized for non-controlling interest, and the fair value of the acquir- recognized in profit or loss in the period in which they incur. Reconciliation of alternative er’s previously held equity interest in the acquiree (if any) over the net identifiable assets acquired performance measures in and liabilities assumed. If this consideration is lower than the fair value of the net assets of the the Yara Group subsidiary acquired, the difference is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Useful lives are set as indefinite with no amortization as there is no foreseeable limit to the cash flows generated by goodwill. Instead of amortization, goodwill is tested for impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to cash-gen- erating units (CGUs) that are expected to benefit from the combination. For more information on impairment, please see note 4.7 Impairment of non-current assets. The Group’s accounting policy for goodwill arising on the acquisition of an associate or joint ventures is described in note 4.3 Associated companies and joint ventures.
149 Yara Integrated Report 2020 2020 2019 Other Other USD million, except percentages Goodwill Software intangibles 1) Total USD million, except percentages Goodwill Software intangibles 1) Total
Cost Cost 01 THIS IS YARA Balance at 1 January 887 203 411 1,501 Balance at 1 January 883 185 408 1,475
02 YEAR IN REVIEW Addition at cost - 9 6 14 Addition at cost - 11 15 26 Derecognition - (2) (22) (24) Derecognition - (1) 2 1 03 FROM THE BOARDROOM Other transfers - 9 (7) 2 Other transfers - 11 (10) - Foreign currency translation 2 4 2 8 Foreign currency translation 5 (3) (4) (2) 04 FINANCIAL STATEMENTS Balance at 31 December 890 222 390 1,502 Balance at 31 December 887 203 411 1,501
Consolidated financial statements Amortization and impairment Amortization and impairment Financial statements for Balance at 1 January (44) (131) (296) (471) Balance at 1 January (41) (110) (274) (424) Yara International ASA Amortization - (24) (17) (41) Amortization - (23) (22) (46) Statement from the Board and the Impairment loss 2) (12) - (3) (15) Impairment loss (3) - - (3) CEO of Yara International ASA Derecognition - 2 22 24 Derecognition - - (2) (2) Auditor’s report Foreign currency translation (2) (5) (3) (10) Foreign currency translation - 2 2 4 Reconciliation of alternative Balance at 31 December (58) (159) (297) (514) Balance at 31 December (44) (131) (296) (471) performance measures in the Yara Group Carrying value Carrying value Balance at 1 January 844 72 115 1,031 Balance at 1 January 842 75 135 1,052 Balance at 31 December 831 64 93 988 Balance at 31 December 844 72 115 1,031
Useful life in years Indefinite 3 - 5 5 - 40 Useful life in years 3 - 5 5 - 40 Amortization rate 20 - 35% 3 - 35% Amortization rate 20 - 35% 3 - 35%
1) Other intangibles comprises mainly customer relationships, patents and trademarks, and intangible assets arising from development. 1) Other intangibles comprises mainly customer relationships, patents and trademarks, and intangible assets arising from development. 2) For further information, see note 4.7.
Expenditures on research and development activities Expenditures on research and development activities are expensed in the period of the amount of USD 91 million (USD 90 million in 2019).
Assets used as security No intangible assets were pledged as security in 2020 and 2019. See note 5.8 for more information.
150 Yara Integrated Report 2020 4.3 Associated companies and joint ventures decisions about the relevant activities require the unanimous consent of the parties sharing con- trol. A joint arrangement is either a joint operation or a joint venture. The classification depends Overview upon rights and obligations of the parties to the arrangement. In a joint operation the parties have Yara has several investments classified as associated companies and joint ventures. The largest rights to the assets and obligations for the liabilities of the arrangement. In a joint venture the investment has been a 25% stake in Qatar Fertiliser Company (QAFCO) which has been reported parties have rights to the net assets of the arrangement. 01 THIS IS YARA in the segment Global Plants & Operational Excellence. This investment was sold during 2020. More information about the sale is provided in n o t e 7.1. Other investments are mainly investments The share of results, assets and liabilities of associated companies and joint ventures are incorpo- 02 YEAR IN REVIEW in sales & marketing entities in the operating segment Americas and production and sales & rated into the consolidated financial statements using the equity method of accounting. Under the marketing entities in the segment Industrial Solutions. Yara also owned 50% in Libyan Norwegian equity method of accounting, the investment is initially recognized at cost and the carrying value 03 FROM THE BOARDROOM Fertilizer Company (LIFECO) until it was sold in 2020. The investment in LIFECO was impaired is subsequently increased or decreased to recognize Yara’s share of profit or loss of the investee several years back in time. after the date of acquisition. Any excess of the cost of acquisition of the Group’s share of the net 04 FINANCIAL STATEMENTS fair value of the identifiable assets, liabilities and contingent liabilities recognized at the date of Accounting policies acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the Consolidated financial statements Associated companies are investments in companies where the Group has significant influence, but investment. The equity-accounted investees are tested for impairment if indications of loss in not control. Significant influence is the power to participate in the financial and operating policy deci- Financial statements for value are identified. An impairment loss is recognized if the recoverable amount, estimated as sions of the investee, but is not control or joint control over those policies. Significant influence nor- Yara International ASA the higher of fair value less costs to sell and value in use, is below the carrying value. Accounting mally exists when the Group holds directly or indirectly between 20% and 50% of the voting rights. policies of equity-accounted investees are changed where necessary to ensure consistency with Statement from the Board and the the policies adopted by the Yara Group. CEO of Yara International ASA A joint arrangement is an arrangement in which two or more parties have joint control. Joint Auditor’s report control is the contractually agreed sharing of control of an arrangement, which exists only when Reconciliation of alternative performance measures in the Yara Group
151 Yara Integrated Report 2020 2020
Investments / (sale, Amortization, Total share of net Dividends/ Posted Foreign currency Balance at and asset held-for-sale), Yara's share of net depreciation and income in equity- Repayment of directly translation Balance at 01 THIS IS YARA USD millions 1 January net and long-term loans income/ (loss) write-down accounted investees capital in equity and other 31 December
1) 02 YEAR IN REVIEW QAFCO 873 (880) 8 - 8 - (1) - - Other 97 2 12 - 12 (9) - 2 107 03 FROM THE BOARDROOM Total 970 (878) 20 - 20 (9) (1) 2 107
04 FINANCIAL STATEMENTS 1) Profit attributable to foreign shareholder (Yara) is subject to tax in Qatar. The tax is paid by QAFCO, but refunded by Yara. Please seenote 7.1 Other Business Initiative.
Consolidated financial statements 2019 Financial statements for Yara International ASA Investments / (sale, Amortization, Total share of net Dividends/ Posted Foreign currency Balance at and asset held-for-sale), Yara's share of net depreciation and income in equity- Repayment of directly translation Balance at Statement from the Board and the USD millions 1 January net and long-term loans income/ (loss) write-down accounted investees capital in equity and other 31 December CEO of Yara International ASA Auditor’s report QAFCO 934 41 1) 55 - 55 (158) - - 873 2) Reconciliation of alternative Other 93 2 10 - 10 (8) - 1 97 performance measures in Total 1,027 44 65 - 65 (166) - 1 970 the Yara Group
1) Profit attributable to foreign shareholder (Yara) is subject to tax in Qatar. The tax is paid by QAFCO, but refunded by Yara. 2) Included in the carrying amount is a USD 30 million accrual for income tax payable. Excluding the tax liability, the carrying amount is USD 903 million.
Due to it being impractical to obtain financial report at the same reporting date as Yara uses, there is for some of the associated companies and joint ventures a lag of 1-3 months for the numbers included.
Ownership, sales and receivables/payables Sales from investees to Yara Group was USD 23 million in 2020 compared to USD 22 million in 2019. The similar amounts for Yara’s current receivable/ (payable) net with investees was USD 3 million in 2020 and USD 1 million in 2019, respectively.
152 Yara Integrated Report 2020 Financial information The following table sets forth summarized unaudited financial information of Yara’s associated companies and joint ventures based on a 100% combined basis. Yara’s share of these investments, which is also specified above, is accounted for using the equity method. QAFCO, LIFECO and others are all classified as associated companies.
01 THIS IS YARA Financial position
02 YEAR IN REVIEW 31 December 2020 31 December 2019
USD millions (unaudited, 100% basis) QAFCO LIFECO Other QAFCO LIFECO Other 03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS Cash and cash equivalents - - 51 337 9 33 Current assets excluding cash and cash equivalents - - 211 480 112 195 Consolidated financial statements Non-current assets - - 138 3,162 95 121 Financial statements for Current liabilities - - (146) (174) (311) (143) Yara International ASA Non-current liabilities - - (26) (137) - (28) Statement from the Board and the Non-controlling interest - - - (39) - (1) CEO of Yara International ASA Net assets - - 228 3,629 (95) 177 Auditor’s report % Share of Yara 25% 50% 25% 50% Reconciliation of alternative Yara's share of total equity - - 100 907 (48) 92 performance measures in Reclassified to assets held-for-sale ------the Yara Group Tax effect of QAFCO 1) - (34) Losses not recognized by Yara 2) - - - - 48 - Goodwill and fair value adjustments - - 7 - - 6 Yara's share of total equity (carrying amount) - - 107 873 - 97
1) Tax effect is tax on profit attributable to Yara from QAFCO.The tax is paid by QAFCO, but refunded by Yara. 2) Losses in excess of Yara’s interest in LIFECO.
153 Yara Integrated Report 2020 Income statement The following income statement amounts are only covering the period for which Yara has been the owner.
2020 2019
01 THIS IS YARA USD millions (unaudited, 100% basis) QAFCO LIFECO Other QAFCO LIFECO Other
02 YEAR IN REVIEW Total operating revenues 199 21 647 1,563 23 697 Interest income 1 - 1 43 - - 03 FROM THE BOARDROOM Depreciation, amortization & impairment loss (49) (47) 10 (289) (48) (34) Operating income 40 (71) 106 278 (72) 105 04 FINANCIAL STATEMENTS Interest expense (1) - (2) (5) - (3) Consolidated financial statements Income tax expense - - (6) - - (7) Non-controlling interest 1 - (1) 3 - (1) Financial statements for Yara International ASA Net income (100%) A 38 (71) 97 320 (72) 94 Statement from the Board and the CEO of Yara International ASA % Share of Yara 25% 50% 25% 50% Yara's share of net income 10 (36) 80 (36) Auditor’s report Tax effect of Qafco 1) (3) (28) Reconciliation of alternative Losses not recognized by Yara 2) - 36 - 36 performance measures in the Yara Group Yara Group elimination 2 - 3 - Currency translation effects 3) - - - - Yara's share of net income (as per books) 8 - 12 55 - 9
Net other comprehensive income that may be reclassified to profit and loss account in subsequent period ------Net other comprehensive income that will not be reclassified to profit and loss account in subsequent period - - - (4) - - Total other comprehensive income, net of tax (100%) B - - - (4) - - % Share of Yara 25% 50% 25% 50% Yara's share of other comprehensive income, net of tax - - (1) - Total comprehensive income C = A+B 38 (71) 97 316 (72) 94
1) Tax effect is tax on profit attributable to Yara from QAFCO. The tax is paid by QAFCO, but refunded by Yara. 2) Losses in excess of Yara’s interest in LIFECO. 3) Certain financial information from equity-accounted investees is only collected once per year and translated at the average rate for the year. Deviations against figures reported and translated on a monthly basis can occur.
154 Yara Integrated Report 2020 4.4 Joint operations Trinidad Nitrogen Co. Ltd. (Tringen) Tringen owns an ammonia complex consisting of two separate ammonia plants which are managed Accounting principles and operated by Yara under a management and operating agreement. In addition, Yara provides In a joint operation the parties have rights to the assets and obligations for the liabilities of the marketing support through sales agency agreements. The two plants have an annual production arrangement. The Group recognizes in relation to its interests in a joint operation: capacity of about 1 million metric tonnes of ammonia which is mainly exported to other markets. 01 THIS IS YARA • Its assets, including its share of assets held jointly; Yara has a 49% ownership stake in Tringen, the remaining 51% of Tringen is owned by National • Its liabilities, including its share of any liabilities incurred jointly; Enterprises Limited, which is a publicly listed Company, in which the Government of the Republic of 02 YEAR IN REVIEW • Its revenue from the sale of its share of the output arising from the joint operation; Trinidad and Tobago has majority shareholding. • Its share of the revenue from the sale of the output by the joint operation and; 03 FROM THE BOARDROOM • Its expenses, including its share of any expenses incurred jointly. Yara Freeport LLC DBA Texas Ammonia Yara and the BASF Group have constructed an ammonia plant at BASF’s site in Freeport, Texas, 04 FINANCIAL STATEMENTS The Group accounts for these assets, liabilities, revenues and expenses in accordance with the US. Commercial operations commenced in 2018. BASF manages and operates the plant. The plant applicable IFRSs. has an annual nameplate production capacity of about 750.000 metric tonnes of ammonia and Consolidated financial statements each party off-takes ammonia from the plant in accordance with their ownership share. The compa- Yara has three investments that are classified as Joint operations: Financial statements for ny is 68% owned by Yara and 32% by BASF. Yara International ASA Yara Pilbara Nitrates Pty Ltd Statement from the Board and the Yara Pilbara Nitrates owns a technical ammonium nitrate (TAN) plant next to Yara’s ammonia plant CEO of Yara International ASA in the Pilbara region of Australia. The plant has an annual production capacity of about 330.000 Auditor’s report metric tonnes of TAN and primarily supplies the mining operations in the region. The company is 50% owned by Yara and 50% by Orica. The plant started production mid-year 2020 and has been Reconciliation of alternative ramping up towards nameplate capacity during 2nd half 2020. performance measures in the Yara Group
155 Yara Integrated Report 2020 The following table shows the effect of consolidating joint operations on Yara’s financial statements. The table is based on unaudited financial information of Yara’s joint operations based on their IFRS financial statements.
Financial position 31 December 2020 31 December 2019
01 THIS IS YARA Yara Freeport Yara's share of Yara Freeport Yara's share of Yara Pilbara LLC DBA Texas consolidated Yara Pilbara LLC DBA Texas consolidated USD millions (unaudited) Nitrates Tringen Ammonia Joint operations Nitrates Tringen Ammonia Joint operations 02 YEAR IN REVIEW Assets 03 FROM THE BOARDROOM Deferred tax assets 34 - - 34 27 - - 27 Property, plant and equipment 398 72 267 736 370 76 283 729 04 FINANCIAL STATEMENTS Right-of-use asset 4 - 4 8 1 - 4 5 Other Non-current assets - 1 1 2 - 1 2 3 Consolidated financial statements Total Non-current assets 435 73 272 780 399 77 288 764 Inventories 5 13 2 20 3 13 3 18 Financial statements for External trade receivables 1 - 13 8 - - 11 11 Yara International ASA Internal trade receivables - - - 6 - 6 - 6 Statement from the Board and the Prepaid expenses and other current assets 1 12 1 14 4 12 1 17 CEO of Yara International ASA Cash and cash equivalents 1 7 17 25 10 7 15 32 Auditor’s report Total Current assets 8 32 33 73 17 38 31 85 Total assets 443 105 305 853 416 115 319 850 Reconciliation of alternative performance measures in the Yara Group Total equity 173 45 289 507 156 55 304 515 , Liabilities Employee benefits - 11 - 11 - 12 - 12 Deferred tax liabilities - 2 - 2 - 7 - 7 Other long-term liabilities 45 - - 45 46 - - 46 Long-term provisions 45 - - 45 25 - - 25 External long-term interest-bearing debt 4 7 4 15 - 8 4 12 Internal long-term interest-bearing debt 162 - - 162 162 - - 162 Total non-current liabilities 256 20 4 280 233 27 4 264 External trade and other payables 11 14 10 35 24 17 11 51 Internal trade and other payables 1 2 - 3 1 2 - 3 Current tax liabilities - - - - 1 - - 1 Short-term provisions 2 - - 2 1 - - 1 Other short-term liabilities - 3 3 6 - 2 - 2 Bank loans and other short-term interest-bearing debt - 20 - 20 - 12 - 12 Total current liabilities 15 39 13 67 27 33 11 71 Total equity and liabilities 443 105 305 853 416 115 319 850 156 Yara Integrated Report 2020 Income statement 2020 2019
Yara Freeport Yara's share of Yara Freeport Yara's share of Yara Pilbara LLC DBA Texas consolidated Yara Pilbara LLC DBA Texas consolidated USD millions (unaudited) Nitrates Tringen Ammonia Joint operations Nitrates Tringen Ammonia Joint operations 01 THIS IS YARA Revenue and other income 30 77 139 246 7 79 145 231 Operating costs and expenses (57) (91) (134) (282) (46) (75) (134) (255) 02 YEAR IN REVIEW Operating income/(loss) (27) (14) 5 (36) (39) 4 11 (24) 03 FROM THE BOARDROOM Income before tax (33) (15) 5 (43) (49) 2 11 (36) Income tax expense 8 5 - 13 8 (1) - 7 04 FINANCIAL STATEMENTS Net income (25) (10) 5 (30) (41) 1 34 (7)
Consolidated financial statements 4.5 Leases • Yara expenses services and other non-lease components embedded in lease contracts for land, Financial statements for vessels, product storage assets, office buildings and other buildings. For leases of other assets, Yara International ASA Accounting policies Yara capitalizes non-lease components subject to fixed payments as part of the lease. IFRS 16 defines a lease as a contract that conveys the right to control the use of an identified asset • Yara expenses short-term leases of machinery, office equipment and other equipment in accor- Statement from the Board and the for a period of time in exchange for consideration. For each contract that meets this definition, IFRS dance with the general short-term exemption in IFRS 16. CEO of Yara International ASA 16 requires lessees to recognize a right-of-use asset and a lease liability in the balance sheet with • Yara expenses low value leases of office equipment and other equipment in accordance with Auditor’s report certain exemptions for short-term and low value leases. Lease payments are to be reflected as the general low value exemption in IFRS 16. interest expense and a reduction of lease liabilities, while the right-of-use assets are to be depre- Reconciliation of alternative ciated over the shorter of the lease term and the assets’ useful life. The portion of lease payments performance measures in Lease terms are determined by including extension and termination options which are reasonably representing payments of lease liabilities shall be classified as cash flows used in financing activi- the Yara Group certain to be exercised. Yara strives to consider all relevant facts and circumstances that create an ties in the statement of cash flows. Payments for short-term leases, low value assets and variable economic incentive for Yara to exercise such options. However, use of significant judgement may be amounts not included in the measurement of the lease liability shall be classified within operating needed. activities. Yara also classify payment of interest within operating activities. Yara discounts the lease liability by using incremental borrowing rates. However, the interest rate Yara has taken advantage of the accounting policy choice in IFRS 16 to not apply the standard to implicit in the lease may be used for selected lease arrangements which are material on Group level leases of intangible assets. This means that leases of intangible assets are accounted for by apply- and if the rate can be readily determined. The incremental borrowing rates are updated on a quar- ing IAS 38 Intangible assets, as before. terly basis and are determined for all relevant currencies and lease terms taking into account the risk free rate, Yara’s credit risk premium, local unit risk premium above Yara country risk premium and Significant lease liabilities for the Group comprise of leases of land, vessels, product storage assets asset risk premium. Updated incremental borrowing rates are applied to new lease arrangements (warehouses, terminals etc.), office buildings and other buildings. Other, less significant leases in recognized during that quarter, as well as for modifications of existing leases. Yara comprise of transportation and logistics assets, machinery and equipment, employee cars, IT infrastructure and office equipment. Yara has applied different accounting policies to different assets as follows:
157 Yara Integrated Report 2020 Right-of-use assets Product Transportation Other USD millions Land Vessels Buildings storage & logistics assets Total
Carrying value 01 THIS IS YARA Balance ROU assets at 1 January 2019 123 20 99 85 55 63 447
02 YEAR IN REVIEW Additions and lease modifications 30 22 12 13 31 6 114 03 FROM THE BOARDROOM Depreciation (7) (11) (20) (30) (26) (17) (111) Impairment (17) - - - - - (17) 04 FINANCIAL STATEMENTS Foreign currency translation gain/(loss) (1) - (2) - (1) (1) (4) Balance at 31 December 2019 129 31 89 69 59 50 428 Consolidated financial statements Financial statements for Additions and lease modifications - 18 27 34 20 23 121 Yara International ASA Depreciation (7) (21) (23) (32) (25) (20) (129) Statement from the Board and the Impairment (1) - - - - - (1) CEO of Yara International ASA Foreign currency translation gain/(loss) 5 1 2 1 1 1 11 Balance at 31 December 2020 125 28 96 72 55 54 430 Auditor’s report Reconciliation of alternative performance measures in Lease liabilities the Yara Group USD millions Long-term Short-term Total
Carrying value Balance lease obligations at 1 January 2019 344 88 432
Additions and lease modifications 116 - 116 Reclassification to short-term (119) 119 - Lease payments - (108) (108) Foreign currency translation gain/(loss) (4) - (4) Balance at 31 December 2019 337 98 435
Additions and lease modifications 120 (3) 117 Reclassification to short-term (136) 136 - Lease payments - (122) (122) Foreign currency translation gain/(loss) 13 2 15 Balance at 31 December 2020 335 111 446
158 Yara Integrated Report 2020 Interest expense on lease liabilities in the period amounts to USD 15 million (2019: USD 15 million). Leases expensed in the period
USD millions 2020 2019 Yara was not committed to any material lease arrangements not yet commenced as of 31 Decem- ber 2020. Expenses relating to variable fee leases not included in the 19 21 measurement of lease liabilities 01 THIS IS YARA There are no material restrictions or covenants imposed by leases. Expenses relating to short-term leases 30 43 Expenses relating to leased assets of low value, excluding 02 YEAR IN REVIEW 1 3 Yara was not granted any significant rent concessions during 2020 as a direct consequence of the short-term leases Covid-19 pandemic. Total leases expensed 50 67 03 FROM THE BOARDROOM Maturity analysis of contractual undiscounted cash flows 04 FINANCIAL STATEMENTS Cash outflows in the period USD millions 2020 USD millions 2020 2019 Consolidated financial statements 2021 128 Principal payments on recognized lease liabilities 122 108 Financial statements for 2022 83 Yara International ASA Interest payments on recognized lease liabilities 14 13 2023 57 Payments on leases expensed in the period 49 66 Statement from the Board and the 2024 41 CEO of Yara International ASA Total cash outflows for leases 186 187 2025 29 Auditor’s report Thereafter 286 Reconciliation of alternative Total undiscounted lease liabilities at 31 December 2020 623 performance measures in the Yara Group
159 Yara Integrated Report 2020 4.6 Other non-current assets USD millions Notes 2020 2019 Accounting policies Other long-term receivables, loans and deposits are initially recognized at fair value. Subsequently Financial assets: they are measured at amortized cost using the effective interest method. Short-term items are Equity instruments 6.1, 6.3 18 19 01 THIS IS YARA normally not discounted. Interest rate swaps designated as hedging instrument 11 - Cross currency swaps 4 - 02 YEAR IN REVIEW On other receivables, loans and deposits, Yara records 12-months expected credit losses if there Receivables and deposits 6.3 5 4 has not been any significant increase in credit risk since initial recognition (the general approach). If Expected credit loss on long-term loans and receivables (1) (1) 03 FROM THE BOARDROOM there has been a significant increase in credit risk, lifetime expected credit losses is recorded. The 12-months expected credit losses reflect losses from default events that are possible within the next Total financial instruments 38 23 04 FINANCIAL STATEMENTS 12 months. They are calculated as the Probability of Default based on the credit rating of different counterparts multiplied with the Loss Given Default based on listed corporate bonds. If a significant Non-financial assets: increase in credit risk since initial recognition is identified, a lifetime expected credit loss for the Consolidated financial statements Prepayments for long-term employee obligations 5.4 75 57 specific receivable, loan or deposit will be recognized based on an individual assessment. The credit Financial statements for Prepayment for property, plant and equipment 33 43 risk has normally increased significantly when a receivable is defaulted. Yara International ASA Other non-financial assets 6.3 97 78 Statement from the Board and the A receivable is considered to be in default when it is overdue and enforcement activities have Tax and VAT receivables 137 213 CEO of Yara International ASA started. If there is a reasonable expectation that enforcement activities will not lead to recovery, Total non-financial assets 342 391 Auditor’s report the receivable is credit impaired. The receivable is written off when enforcement activities lead to objective evidence of the receivable being irrecoverable. Reconciliation of alternative Total 380 414 performance measures in Yara’s expected credit losses on other receivables, loans and deposits are limited. As a result, Long-term VAT receivables in Brazil the Yara Group disclosures are reduced due to materiality. At year-end 2020, Yara has recognized USD 125 million of tax credits related to value added taxes in Brazil (2019: USD 213 million). This is included in the line “Tax and VAT receivables” in the table above. The Brazilian tax system is highly complex. There are a number of taxes by Federal, State and Municipal authorities and the legislation is subject to constant changes. The indirect taxes, such as value added taxes, are levied at Federal (PIS/COFINS) and State (ICMS) level. PIS/COFINS are charged over gross revenues, with a rate of 1.65% and 7.6%. However, fertilizer sales have a PIS/CO- FINS tax rate of zero. Yara accumulates credits over the acquisition of inputs and other costs (mainly bags, services and freights). These accumulated credits can be used to offset other federal taxes in many circumstances and projections indicate these will be consumed in the operation and/or refunded by the tax authorities in the following years, without any need of accounting adjustments.
The general rates for ICMS are 18%, 17%, 12%, 7% and 4%, but a temporary benefit granted for fertilizers and other industries reduces these rates to 0% on internal operations within most of the States and to 4.90% or 8.4% on interstate operations. The current legislation results in accumula- tion of ICMS tax credits in a number of States. Yara maintains a provision for expected discounts/ losses where these credits are not expected to be realized in full through normal operations. The provision is USD 19 million at year-end 2020 (2019: USD 20 million).
160 Yara Integrated Report 2020 4.7 Impairment on non-current assets Recognized impairment loss
Accounting policies USD millions 2020 2019 Cash-generating units (CGUs) to which goodwill has been allocated are tested for impairment annu- ally, or more frequently when there is an indication that the unit may be impaired. Any impairment Asset class 01 THIS IS YARA loss is allocated first to reduce the carrying amount of goodwill allocated to the CGU, and then to Goodwill (12) (3) the CGUs’ other assets on a pro rata basis of the carrying amounts. An impairment loss recognized Other intangible assets (3) - 02 YEAR IN REVIEW for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal. Property, plant and equipment (29) (26) 03 FROM THE BOARDROOM Right-of-use assets (1) (17) Non-current assets other than goodwill are tested for impairment whenever events or changes in Total impairment of non-current assets (46) (46) 04 FINANCIAL STATEMENTS circumstances indicate that such carrying amounts may not be recoverable. Indications that could Reversal of impairment of non-current assets 1 3 trigger an impairment test include for instance: Net impairment loss (46) (43) Consolidated financial statements • Significant underperformance relative to historical or projected future results • Significant changes in the Group’s use of the assets or the strategy for the overall business Financial statements for • Significant negative industry or economic trends Yara International ASA USD millions 2020 2019 Statement from the Board and the An impairment loss is recognized to the extent that the assets’ carrying value exceeds its recov- Segment split 1) CEO of Yara International ASA erable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and Europe (25) (27) Auditor’s report value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash Americas (3) (13) Reconciliation of alternative inflows from other assets or groups of assets (CGUs). In assessing value in use, the estimated future Africa & Asia (2) (3) performance measures in cash flows are discounted to their present value using a pre-tax discount rate. Global Plants & Operational Excellence - - the Yara Group Industrial Solutions (1) - Previously recognized impairment losses, except for impaired goodwill, are reversed if the assump- Other and Eliminations (15) - tions for impairment are no longer present. Impairment losses are only reversed to the extent that the asset’s carrying value does not exceed the carrying value that would have been determined, net Net impairment loss (46) (43)
of depreciation, if no impairment had been recognized. 1) 2019 figures are restated in accordance with the new regional segment structure. Yara total figures remain unchanged.
In 2020, Yara moved to a regional organizational structure. Yara’s operations comprise of five operating segments; Europe, Americas, Africa & Asia, Global Plants & Operational Excellence and Industrial Solutions. Goodwill allocated to CGUs or group of CGUs impacted by the reorga- nization has been reallocated to reflect the lowest level at which goodwill is now monitored for internal management purposes. The reallocation of goodwill is considered to have no impact on recognized impairments or reversal of impairments.
Impairment charges in 2020 Impairment of property, plant and equipment is mainly related to an additional impairment on the Montoir plant in France with USD 22 million.
161 Yara Integrated Report 2020 Impairment charges in 2019 modity value of the nutrient. These premiums reflect an agronomic value-add of the products, Total impairment charges in 2019 was USD 46 million of which 27 million is related to Montoir and the estimated premiums for each plant are based on historically achieved premiums above plant in France. the Yara average premium in main markets. For both NPK and nitrates, internally developed forecasts are used since there are no active forward markets for these products. External mar- Impairment testing ket intelligence reports are used as one of many input factors. 01 THIS IS YARA The mandatory impairment testing of CGUs or group of CGUs with allocated goodwill or assets with indefinite useful life are carried out during third quarter each year. Yara has also performed • Ammonia prices 02 YEAR IN REVIEW testing of other CGUs or individual assets with various impairment indicators. The recoverable For a number of Yara’s plants, the ammonia price is a key assumption for calculating the value- amounts for units with allocated goodwill have been determined based on “value-in-use”. in-use. Some plants are net buyers of ammonia, in which case increased ammonia prices has 03 FROM THE BOARDROOM a negative impact on earnings while other plants are net sellers of ammonia and these plants Main assumptions will benefit from higher ammonia prices. Internally developed price forecasts are used since 04 FINANCIAL STATEMENTS Discount rate there is no active forward market for ammonia. External market intelligence reports are used Discount rates used in the calculation of value-in-use reflect the current market assessment of as one of many input factors. Consolidated financial statements the risks specific to each cash generating unit. The discount rates were estimated based on the Financial statements for weighted average cost of capital for the industry. This rate was further adjusted to reflect the • Natural gas purchase prices Yara International ASA currency in which the CGU operates and market assessments of any risk specific to the CGU for Natural gas is the most important cost factor for several of Yara’s production plants. Yara which future estimates of cash flows have not been adjusted. maximizes the use of observable gas market input for the purpose of impairment testing. For Statement from the Board and the certain regions, where no liquid market for natural gas exists, Yara prepares internal forecasts CEO of Yara International ASA Currency rates and inflation based on the expected supply/demand balance. Auditor’s report The value-in-use calculation is performed in the most relevant currency for the CGU. When converting foreign currency cash flows to the testing currency, Yara uses the forecasted annual • Production reliability Reconciliation of alternative performance measures in average rates estimated by IHS based on the “purchasing power parity” (PPP) principle. The pro- Production reliability is important for the plants’ profitability as this impacts both the production the Yara Group jections include long-term inflation (CPI) in which each CGU is located. volume and the energy consumption factor (energy per ton produced). The reliability assump- tion is plant specific, taking into consideration the historical experienced reliability and imple- Risk and uncertainties mented improvement initiatives. To account for specific risk factors and uncertainties for specific CGUs such as climate risk, a sce- nario-based approach has been used in the impairment testing where relevant. The scenarios are • Capital expenditures weighted with a probability to arrive at a value-in-use. Ammonia and finished fertilizer plants require significant maintenance investments. The es- timated amounts reflect past experience and plant specific knowledge. To the best of man- Assumptions relevant for production assets agement’s judgment, estimated capital expenditures do not include capital expenditures that The valuations of production assets are based on Yara’s long-term commodity and energy price enhance the current performance of assets and related cash flows have been treated consis- forecasts. Due to the cyclicality of the fertilizer industry, Yara includes cash flow projections for a tently. longer period than five years. Despite a relatively steady growth in market demand, history shows that there are periods with oversupply. Yara’s internal commodity forecasts reflect its assessment Assumptions relevant for sales units of the supply/demand balance in the short to medium term. After a period of maximum eight Sales units within each regional segment market and distribute a complete range of crop nutrition years, all the main commodity sales price assumptions reflect an annual nominal growth that is products, technologies and knowledge. Industrial Solutions develops and market environmental not exceeding the relevant inflation rates. The main assumptions for the impairment testing are: solutions and essential products for industrial applications. These units are able to create value over and above the commodity value of the product. Management forecasts for market premiums are • Fertilizer prices not exceeding five years with the first year derived from the CGU’s business plan. After a period The urea price is the most important assumption when testing nitrogen fertilizer plants for of five years, Yara uses a steady growth rate that is not exceeding the growth for the products, impairment, as urea is the global price setter for commodity nitrogen. Yara’s nitrate and NPK industry or countries in which the CGUs operate. The growth rate is maximum 2% (nominal) after 162 prices are estimated using urea as the base adding the estimated premiums on top of the com- year five. Yara Integrated Report 2020 Cash generating units with goodwill Goodwill acquired through business combinations has been reallocated to new CGUs in accordance with the new regional structure, presented together with the applicable discount rates used for the impairment testing:
01 THIS IS YARA Goodwill Discount rate pre-tax USD millions Segment 2020 2019 2020 2019 02 YEAR IN REVIEW Belle Plaine (Canada) Americas 292 285 6.1% 8.4% 03 FROM THE BOARDROOM Region Europe Europe 170 159 6.6% Pilbara Ammonia (Australia) Africa & Asia 111 111 6.3% 8.5% 04 FINANCIAL STATEMENTS Brazil Americas 63 81 10.1% 14.2% Ammonia Trade (Switzerland) Global Plants 55 55 5.7% 7.4% Consolidated financial statements Region Americas Americas 47 47 7.9% Financial statements for India Africa & Asia 33 34 8.9% 11.1% Yara International ASA Environmental Solutions Maritime Industrial Solutions 19 18 6.1% 7.8% Statement from the Board and the Latin America Americas 16 17 11.1% 16.8% CEO of Yara International ASA Region Industrial Solutions Industrial Solutions 14 13 7.1% Auditor’s report Other Various 11 23 Total 1) 831 844 Reconciliation of alternative performance measures in the Yara Group Sensitivities for main CGUs with allocated goodwill production assets in Italy and the Tertre plant in Belgium that are described in the section “Sensi- tivities for main assets or CGUs with no allocated goodwill” below. Belle Plaine (Canada) The CGU Belle Plaine comprises fertilizer production and its sales and distribution activity. The The group of CGU’s value-in-use is significantly higher than the carrying amount. No reasonable production site has an ammonia plant, a nitric acid plant and a urea granulation plant, with annual possible change in any of the key assumptions would cause the unit’s recoverable amount to be production capacity of 0.7 million tonnes ammonia, 0.1 million tonnes nitric acid, 1.1 million tonnes lower than the carrying value. urea and 0.2 million tonnes UAN. The majority of the ammonia and nitric acid produced is used in the production of UAN and granular urea, but some of the ammonia is sold for agricultural Pilbara Ammonia (Australia) purposes during peak ammonia seasons. The CGU’s value-in-use is significantly higher than the This is an ammonia plant located in Western Australia with an annual production capacity of carrying amount. No reasonable possible change in any of the key assumptions would cause the approximately 0.8 million tonnes. The CGU has a carrying value of USD 916 million and a value- unit’s recoverable amount to be lower than the carrying value. in-use that is 65% higher. Key assumptions for the testing are the ammonia price, the natural gas cost and the discount rate. An isolated reduction to the ammonia price of 12% for all years, an Region Europe isolated increase to the forecasted gas cost of 25% and an isolated increase to the discount rate The operating segment covers all operations such as production, sales and distribution in the of 3% points would reduce the headroom to nil. Europe region. More information about the segment is provided in note 2.3. The EU Green Deal most likely represents both risks and opportunities for region Europe. To reflect this, the region has used probability weighted scenarios. The same principle has been used for assets or CGUs within the region that have been tested separately due to impairment indicators. This includes the 163 Yara Integrated Report 2020 Brazil premium product sales growth is the most important assumption together with the discount rate. The CGU Business unit Brazil covers several aspects of fertilizer production and distribution, The premium product sales growth is estimated for the first five years and a terminal growth of including phosphate mining, production of Single Super Phosphate (SSP) as well as blending 2% has been used in the valuation model. Should the estimated premium product sales growth and distribution of fertilizers, delivering approximately 9 million tonnes of fertilizers and covering not materialize, and the growth from 2021 only be 2%, it would trigger an impairment of approx- approximately one fourth of the Brazilian market demand. The main production and blending imately USD 60 million. An isolated increase to the post-tax discount rate of 3% points would 01 THIS IS YARA assets comprised by the CGU are the Salitre plant under construction and the Rio Grande plant. reduce the headroom to nil. After finalization of the construction, the Salitre plant, including the mine, will have an annual 02 YEAR IN REVIEW production capacity of approximately 1–1.2 million tonnes of phosphate rock and 1 million tonnes Latin America of finished fertilizer (SSP equivalents), in addition to a blending capacity of approximately 1 million Business unit Latin America comprises 13 blending units with a total capacity of around 2 million 03 FROM THE BOARDROOM tonnes. Currently, the Rio Grande plant has a production capacity of 0.8 million tonnes of finished tonnes, and a distribution network that includes Mexico, Guatemala, Costa Rica, Panama, Co- fertilizer (NPK and SSP depending on market demand), in addition to a blending capacity of ap- lombia, Ecuador, Peru, Bolivia, Chile and Argentina. The production facility in Cartagena has one 04 FINANCIAL STATEMENTS proximately 1.6 million tonnes. However, there is an ongoing expansion project at the Rio Grande ammonia plant, three nitric acid plants, one NPK plant, three ammonium nitrate solution units plant, which is expected to be finalized during the first half of 2021. After finalization of the and one calcium nitrate plant. Consolidated financial statements expansion project, the Rio Grande plant will have an annual production capacity of approximately Financial statements for 1.1 million tonnes of finished fertilizer (NPK and SSP depending on market demand), in addition to The CGU has a carrying amount of USD 461 million and a value-in-use that is 95% higher. The Yara International ASA a blending capacity of approximately 2.2 million tonnes. business plan for 2021 is the most important input factor, together with the discount rate and the annual growth rate. An isolated reduction to the estimated EBITDA during the projected period Statement from the Board and the The CGU’s value-in-use is significantly higher than the carrying amount. No reasonable possible of 15%, a reduction to the terminal growth rate after year five of 5% points (down from 2%) or an CEO of Yara International ASA change in any of the key assumptions would cause the unit’s recoverable amount to be lower than increase to the post-tax discount rate of 3% points would reduce the headroom to nil. Auditor’s report the carrying value. Sensitivities for main CGUs with no allocated goodwill Reconciliation of alternative performance measures in Ammonia Trade (Switzerland) Yara has performed testing of several CGUs with impairment indicators. The impairments recog- the Yara Group The global ammonia trade and supply unit is supplying and/or off-taking the necessary ammo- nized during 2020 are explained above. nia volumes for Yara’s production plants. The CGU also includes five Yara owned LPG carriers. The CGU’s value-in-use is significantly higher than the carrying amount. No reasonable possible Some of the CGUs that were tested based on impairment indicators presented low headroom change in any of the key assumptions would cause the unit’s recoverable amount to be lower than between the recoverable value, calculated based on value-in-use, and their carrying values. The the carrying value. main CGUs that are sensitive are described below:
Region Americas Yara Pilbara Nitrates The operating segment covers all operations such as production, sales and distribution in Americas The joint operation Yara Pilbara Nitrates owns a TAN plant in Australia. Carrying value of the CGU region. More information about the segment is provided in note 2.3. The group of CGUs has a car- is USD 382 million, representing Yara’s 50% ownership stake. The plant commenced operations rying value of USD 3,929 million and a value in use that is 56% higher. The business plan for 2021 in 2020 after being down for a longer time to carry out rectification works. The key assumptions is the most important input factor, together with the discount rate and the annual growth rate. An are the TAN margin above ammonia cost, which is estimated for the TAN market in Western isolated reduction to the estimated EBITDA of 18% for all years, an isolated reduction to the growth Australia, and the discount rate (8% on pre-tax basis). An individual reduction to the margin above rate after year five of 3% points (down from 2%) and an isolated increase to the discount rate of ammonia cost of 10% would trigger an additional impairment of USD 80 million. An increase in 2.5% points would reduce the headroom to nil. the post-tax discount rate of 1% point would trigger an additional impairment of USD 52 million.
India Italy The CGU comprises a urea plant with the related urea distribution business and premium product Italy comprises two production sites, with an annual production capacity of 0.6 million tonnes am- sales. The plant produces 0.7 million tonnes ammonia and 1.3 million tonnes urea. monia, 0.4 million tonnes nitrates, 0.6 million tonnes urea and 0.4 million tonnes NPK. The CGU has a carrying value of USD 219 million. The projected fertilizer prices, natural gas purchase price 164 The CGU has a carrying amount of USD 433 million and a value-in-use that is 52% higher. The and the discount rate (9.9% on pre-tax basis) are the key assumptions An individual reduction to Yara Integrated Report 2020 the fertilizer prices of 10% for all years would trigger an additional impairment of USD 147 million. 4.8 Committed future investments An increase in the natural gas purchase price of 10% would trigger an additional impairment of USD 147 million. An increase in the discount rate of 1% point would trigger an additional impair- Investments Investments Investments USD millions 2021 Thereafter Total ment of USD 1 million.
01 THIS IS YARA Contract commitments for investments in property, Tertre 285 13 298 plant and equipment Yara’s production site in Tertre, Belgium comprises one ammonia plant, one nitric acid plant 02 YEAR IN REVIEW Contract commitments for other future investments 6 29 35 and one nitrates plant, with an annual production capacity of 0.4 million tonnes ammonia, 0.7 Contract commitments for acquisition or own million tonnes nitric acid and 1 million tonnes nitrates. The majority of the ammonia and nitric acid 24 33 57 03 FROM THE BOARDROOM generated intangible assets produced is used in the production of nitrates, which are sold to various European markets. The Total 315 75 390 CGU has a carrying amount of USD 259 million. The key assumptions for the testing are the urea 04 FINANCIAL STATEMENTS price, the natural gas cost and the discount rate (6.8% on pre-tax basis). An individual reduction to the urea price of 10% for all years would trigger an additional impairment of USD 224 million. Yara has publicly communicated committed total investments of USD 1.3 billion in 2021 which Consolidated financial statements An increase in the natural gas purchase price of 10% would trigger an additional impairment of corresponds to investments that passed decision gate that commits fund but for which external contracts are not necessarily signed. USD 101 million of these investments are included as con- Financial statements for USD 133 million. An increase in the discount rate of 1% point would trigger an additional impair- Yara International ASA ment of USD 47 million. tractual commitments in the table above. Statement from the Board and the Yara Dallol (Ethiopia) There is no material amount to disclose for commitments related to equity-accounted investees, CEO of Yara International ASA The company is developing a potash resource in Dallol in the Danakil Depression of Ethiopia. In following the sale of QAFCO in 2020. Auditor’s report 2015, Yara announced that an independent study identified an annual production of 0.6 million tonnes sulphate of potash (SOP) over 23 years from the reserves. Yara signed a mining agree- Reconciliation of alternative performance measures in ment with the Ethiopian authorities in 2017. The CGU has a carrying amount of USD 220 million. the Yara Group The cash inflow for this project starts several years into the future and there are multiple uncer- tainties related to the project’s profitability, financing, and necessary governmental permits and agreements. The project is currently on hold, while working on a structural solution for the next stage of development of the project. Negative impacts on any of the above risks or failure to en- sure a structural solution, could result in a decision to stop the project, and a resulting impairment loss.
Future potential reversals of impairment Yara has recognized impairment losses on several CGUs over time. These impairments will be re- versed, fully or partly, when and if the situation improves and the recoverable value is determined to be higher than the carrying amount. The increased carrying amount cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in prior periods. A large portion of the historical impairments is related to the plants in Montoir (France). Upon improvement on the key conditions for reversals such as increase in fertilizer prices and stable production in the plants, the maximum amount of potential reversal at year-end 2020 would be USD 102 million.
165 Yara Integrated Report 2020 5 Equity and liabilities
01 THIS IS YARA 5.1 Share information
02 YEAR IN REVIEW The Annual General Meeting in May 2020 approved a dividend for 2019 of NOK 4,045 million When own shares are repurchased the amount of consideration paid, including directly attrib- (NOK 15.00 per share), which was paid out during second quarter 2020 (USD 401 million). utable costs, is recognized as a change in equity. Repurchased shares are classified as treasury 03 FROM THE BOARDROOM shares and presented as a deduction from total equity. Gain/loss from the sale of own shares is The Extraordinary General Meeting in November 2020 approved an additional dividend of NOK recognized as a change in equity. 04 FINANCIAL STATEMENTS 4,766 million (NOK 18.00 per share), which was paid out during fourth quarter 2020 (USD 525 million). Yara has one class of shares, all with equal voting rights and the right to receive dividends. Consolidated financial statements On 7 May 2020, the Annual General Meeting authorized the Board of Directors to acquire up to Number of Financial statements for 13,406,611 shares in the open market and from the Norwegian State. Shares may be purchased shares USD millions Ordinary shares Own shares outstanding Yara International ASA within a price range from NOK 10 to NOK 1,000. The shares shall be subsequently cancelled. Statement from the Board and the Yara has renewed its agreement with the Norwegian State according to which the State’s shares Total at 31 December 2018 273,217,830 (520,000) 272,697,830 CEO of Yara International ASA will be redeemed on a pro-rata basis to ensure the State’s ownership is unchanged in the event of a cancellation of shares bought back. Auditor’s report Redeemed shares Norwegian State 1) (295,193) - (295,193) Reconciliation of alternative During 2020, Yara has purchased 5,131,128 own shares under the 2020 buy-back program for a Shares cancelled 1) (520,000) 520,000 - performance measures in total consideration of NOK 1,823 million (USD 201 million). These shares will be cancelled at the Treasury shares - share buy-back program 1) (1,362,013) (1,362,013) the Yara Group next Annual General Meeting to be held in May 2021. Pursuant to the agreement with the Nor- Total at 31 December 2019 272,402,637 (1,362,013) 271,040,624 wegian State, total equity attributable to the shareholders of the parent has been reduced with an additional NOK 982 million (USD 109 million) for the commitment to redeem 2,912,838 shares 1) from the Norwegian State. Treasury shares - share buy-back program (1,362,013) (1,362,013) Redeemed shares Norwegian State 2) (1,546,374) (1,546,374) Under the 2019 buy-back program, Yara purchased 1,362,013 own shares in 2020 for a total Shares cancelled 2) (2,724,026) 2,724,026 - consideration of NOK 496 million (USD 51 million) and 1,362,013 own shares in 2019 for a total Treasury shares - share buy-back program 2) (5,131,128) (5,131,128) consideration of NOK 486 million (USD 53 million). These shares were cancelled at the Annual Total at 31 December 2020 268,132,237 (5,131,128) 263,001,109 General Meeting on 7 May 2020. Pursuant to the agreement with the Norwegian State, total equity attributable to the shareholders of the parent was reduced with an additional NOK 555 1) As approved by the General Meeting 7 May 2019. million (USD 59 million) for the redemption of 1,546,374 from the Norwegian State. 2) As approved by the General Meeting 7 May 2020.
166 Yara Integrated Report 2020 5.2 Non-controlling interests
Summarized financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below.
2020 01 THIS IS YARA Total at Share Dividend Share capital Foreign currency Total at USD millions 1 January of profit distributed Disposals increase translation 31 December 02 YEAR IN REVIEW Yara Dallol B.V. 67 (1) - - 1 - 67 03 FROM THE BOARDROOM Other 13 - (1) - - - 12 Total 79 (1) (1) - 1 - 79 04 FINANCIAL STATEMENTS
2019 Consolidated financial statements Total at Share Dividend Share capital Foreign currency Total at Financial statements for USD millions 1 January of profit distributed Disposals increase translation 31 December Yara International ASA GICS Indústria, Comércio e Serviços S.A. 1) 148 (9) - (139) - - - Statement from the Board and the CEO of Yara International ASA Yara Dallol B.V. 69 (2) - - - - 67 Other 10 1 (2) 2 - - 13 Auditor’s report Total 227 (10) (2) (137) - - 79 Reconciliation of alternative 1) On 10 July 2019, Yara acquired their 40% interest GICS Indústria, Comércio e Serviços S.A. performance measures in the Yara Group Place of incorporation and percentage of non-controlling interests Company name Place of incorporation Percentage non-controlling interests 1) 2020 Percentage non-controlling interests 1) 2019
Yara Dallol B.V. The Netherlands 2) 41.40% 3) 41.83%
1) Equals voting rights. 2) Place of operations is Ethiopia. 3) The ownership percentage of non-controlling interests is reduced by 0.433 percentage points in 2020 (2019: 4.06 percentage points).
Restrictions and other information related to significant non-controlling interests The shareholders in Yara Dallol have agreed that no dividends shall be distributed from the company before the start of production. After that, the company shall pay out as much as permitted by applicable law and possible restrictions in future financing agreements. At 31 December 2020, Yara Dallol held USD 1.4 million in cash and cash equivalents (2019: USD 3 million).
167 Yara Integrated Report 2020 Financial position for companies with significant non-controlling interests 2020 2019 USD millions Yara Dallol Yara Dallol
Current Assets 3 5 01 THIS IS YARA Non-current assets 231 227 Current liabilities (5) (12) 02 YEAR IN REVIEW Non-current liabilities (30) (25) 03 FROM THE BOARDROOM Equity attributable to owners of the company (131) (129) Non-controlling interests (67) (67) 04 FINANCIAL STATEMENTS
Consolidated financial statements Income statement for companies with significant non-controlling interests 2020 2019 Financial statements for USD millions Yara Dallol Yara Dallol Yara International ASA Statement from the Board and the Total operating revenues and other income - - CEO of Yara International ASA Expenses (1) (5) Auditor’s report Net income/(loss) (2) (5) Reconciliation of alternative performance measures in Net income attributable to shareholders of the parent (1) (3) the Yara Group Net income attributable to non-controlling interests (1) (2) Net income/(loss) (2) (5)
Other comprehensive income attributable to shareholders of the parent - - Other comprehensive income attributable to non-controlling interests - - Other comprehensive income/(loss) for the year - -
Total comprehensive income attributable to shareholders of the parent (1) (3) Total comprehensive income attributable to non-controlling interests (1) (2) Total comprehensive income/(loss) for the year (2) (5)
Net cash inflow/(outflow) from operating activities (6) (1) Net cash inflow/(outflow) from investing activities 1 (15) Net cash inflow/(outflow) from financing activities 4 14 Net cash inflow/(outflow) (1) (2)
168 Yara Integrated Report 2020 5.3 Interest-bearing debt
Accounting policies Interest-bearing borrowings are initially recognized at fair value less direct transaction costs. Subsequently they are measured at amortized cost using the effective interest method.
01 THIS IS YARA Specification Long-term interest-bearing debt 02 YEAR IN REVIEW Denominated amounts 2020 Carrying Values 03 FROM THE BOARDROOM Weighted average Currency USD millions, except percentages and denominated amounts Notes Maturity interest rates Millions USD Millions 2020 2019 04 FINANCIAL STATEMENTS NOK (Coupon 2.55%) 6.1 2021 2.6% 700 82 83 79 Consolidated financial statements NOK (Coupon NIBOR + 0.75%) 6.1 2022 1.1% 1,250 147 147 142 Financial statements for SEK (Coupon STIBOR + 1.00%) 6.1 2022 0.7% 450 55 55 48 Yara International ASA SEK (Coupon 1.10%) 6.1 2022 1.2% 800 98 99 86 Statement from the Board and the NOK (Coupon 3.00%) 6.1 2024 3.0% 600 70 73 68 CEO of Yara International ASA NOK (Coupon 2.45%) 6.1 2024 2.5% 1,000 117 120 111 Auditor’s report USD (Coupon 3.80%) 6.1 2026 3.9% 500 500 499 498 Reconciliation of alternative NOK (Coupon 2.90%) 6.1 2027 2.9% 1,000 117 122 111 performance measures in USD (Coupon 4.75%) 6.1 2028 4.8% 1,000 1,000 997 996 the Yara Group USD (Coupon 3.15%) 6.1 2030 3.2% 750 750 746 - Total unsecured debenture bonds 2,940 2,139
USD 1.3% 538 538 538 933 Total unsecured bank loans 538 933
Mortgage loans 23 21 Other long-term debt 2 3 Total 25 24
Outstanding long-term debt 3,503 3,096 Less: Current portion (132) (398) Total 3,371 2,698
169 Yara Integrated Report 2020 The carrying values include issuance discount, capitalized issuance costs and fair value hedge Contractual payments on long-term debt
accounting adjustments as indicated above (see also note 6.3 Financial Instruments for further USD millions Debentures 1) Bank Loans Other Total 2) information about fair value of financial instruments). 2021 83 48 - 132 At 31 December 2020, the fair value of the long-term debt, including the current portion, is USD 01 THIS IS YARA 2022 300 203 - 503 3,829 million and the carrying value is USD 3,503 million. 2023 - 45 - 45 02 YEAR IN REVIEW 2024 194 181 - 375 Yara builds its funding on a negative pledge structure with the basic funding ranging pari passu. Substantially all unsecured debenture bonds and unsecured bank loan agreements therefore 2025 - 30 23 53 03 FROM THE BOARDROOM contain provisions restricting the pledging of assets to secure future borrowings. Thereafter 2,363 30 2 2,395 Total 2,940 538 25 3,503 04 FINANCIAL STATEMENTS Of the long-term debt at the end of 2020, USD 2,250 million in bond debt originates from Yara’s June 2020, June 2018, and June 2016 bond issues in the US market according to 144A/ 1) Yara International ASA is responsible for the entire amount. Consolidated financial statements Regulation S. Further, NOK 1,300 million originates from Yara’s December 2014 bond issues in 2) Including current portion. Financial statements for the Norwegian market while NOK 3,250 million and SEK 1,250 million originate from Yara’s De- Short-term interest-bearing debt Yara International ASA cember 2017 bond issues in the Norwegian market. The entire NOK and SEK denominated bond debt is converted to USD exposure through cross-currency swaps. USD millions, except percentages Notes 2020 2019 Statement from the Board and the CEO of Yara International ASA Yara’s additional long-term funding is based on bank loans. Yara’s term loan from the Nordic Credit facilities 179 418 Auditor’s report Investment Bank has been reduced to USD 45 million through scheduled down-payments and Overdraft facilities 35 26 linear installments will continue until December 2023. Likewise, the loan facility established Reconciliation of alternative Other 131 50 in January 2018 with partial support by a guarantee from The Norwegian Export Credit Guar- performance measures in Total 6.3 345 494 the Yara Group antee Agency (GIEK), has been reduced to USD 183 million through scheduled down-payments and semi-annual installments will continue until August 2026. Both the USD 150 million term 1) loan due 2022 from the International Finance Corporation and the USD 150 million term loan Weighted Average Interest Rates due 2024 from Svensk Exportkredit AB remain fully drawn at year-end 2020. A further minor Credit facilities 4.4% 4.3% portion of the long-term bank loans is borrowed in emerging markets. Overdraft facilities 2.5% 9.5% Other 1.3% 2.5% Yara has undrawn long-term revolving credit facilities totaling USD 1,100 million, whereof USD 89 million falls due in 2024 and the rest in 2025. 1) Repricing minimum annually.
Of the fixed interest rate debenture bonds, NOK 3,300 million and SEK 800 million are ex- Yara has access to short-term credit and overdraft facilities with various banks both centrally and posed to floating interest rates through interest rate swaps, seenote 6.1 Financial risks. in local markets. At 31 December 2020, the unused frame of such facilities totals approximately USD 1,170 million.
170 Yara Integrated Report 2020 Reconciliation of liabilities arising from financing activities Non-cash changes
Foreign exchange USD millions 31 Dec 2019 Cash flows movement Amortization 1) Other Reclassification 31 Dec 2020 01 THIS IS YARA Long-term interest-bearing debt 2,698 746 39 (3) 16 ²) (124) 3,371
02 YEAR IN REVIEW Bank loans and other interest-bearing short-term debt 494 (214) (9) - 74 ³) - 345 Current portion of long-term debt 398 (402) 12 - - 124 132 03 FROM THE BOARDROOM Total liabilities from financing activities 3,590 130 42 (3) 89 - 3,847
1) Amortization of transaction cost. 04 FINANCIAL STATEMENTS 2) Value changes on interest rate swaps designated as hedging instruments. 3) Includes provision for buy-back of the Norwegian State’s shares. Consolidated financial statements Financial statements for See note 4.5 Leases for reconciliation of liabilities arising from leasing activities. Yara International ASA Statement from the Board and the 5.4 Pensions and other long-term employee benefit obligations CEO of Yara International ASA Overview plan. The amount is an estimation of future benefits that the employees have earned in return Auditor’s report The Group companies provide various retirement plans in accordance with local regulations and for their service in current and prior periods. The benefit is discounted to determine its present Reconciliation of alternative practices in the countries in which they operate. value, and the fair value of plan assets is deducted. The discount rate is the yield at the balance performance measures in sheet date on high quality corporate bonds or government bonds where no market for high quality the Yara Group Defined benefit plans are generally based on years of service and average or final salary levels, corporate bonds exists. If the bond has a different maturity from the obligation, the discount rate is offering retirement benefits in addition to what is provided by state pension plans. Most of the adjusted. Qualified actuaries using the projected credit unit method perform the calculations. defined benefit plan obligations are covered by external insurance companies or by pension funds. By definition, both investment risk and actuarial risk (i.e. the actual level of benefits to be Past service costs arising from the amendment of plan benefits are recognized immediately in paid in the future) are retained by the Group companies. profit or loss. Remeasurement gains and losses are recognized as retained earnings through other comprehensive income in the period they occur, and will not be reclassified to profit or loss Defined contribution plans require the companies to make agreed contributions to a separate in subsequent periods. fund when employees have rendered services entitling them to the contributions. The companies have no legal or constructive obligation to pay further contributions. Defined contribution plans Contributions to defined contribution plans are recognized as an expense in the statement of Some companies make contributions to multi-employer pension plans included in a joint arrange- income when employees have rendered services entitling them to the contributions. Prepaid ment with others. All multi-employer plans are accounted for as defined contribution plans. contributions are recognized as an asset to the extent that a cash refund or deduction in future payments is available. Some companies have recognized provisions for jubilee benefits, which are classified as Other long-term employee benefits. Other long-term benefits The Group’s obligation in respect of other long-term benefits is the amount of future benefits Accounting policies that the employees have earned in return for their service in current and prior periods. The obli- Defined benefit plans gation is discounted based on the same principles as defined benefit plans. The Group’s net obligation in respect of defined benefit plans is calculated separately for each 171 Yara Integrated Report 2020 Long-term employee benefit obligations recognized in the statement of financial position pension obligations in Norway include certain unfunded pension arrangements as well as early retirement schemes. Retirement age is flexible from age 62 to age 67.
USD millions Notes 2020 2019 A majority of Yara’s obligations under defined benefit plans are related to subsidiaries within the Eurozone: 01 THIS IS YARA Defined benefit plans (609) (480) Surplus on funded defined benefit plans 75 57 Employees of Yara’s Dutch subsidiaries hired before 1 August 2014 are members of a funded 02 YEAR IN REVIEW Net liability for defined benefit plans (534) (424) Defined Benefit pension plan. Employees born before 1950 and who were in service before 2006 are entitled to a pension scheme based on final salary at the age of retirement. The other employ- 03 FROM THE BOARDROOM Termination benefits (4) (3) ees are members of an Average Pay scheme. Retirement age is 68. The funded Defined Benefit Other long-term employee benefits (15) (14) pension plan has been closed for new members from 1 August 2014. New hires are enrolled in a 04 FINANCIAL STATEMENTS Net long-term employee benefit obligations Defined Contribution pension plan from the same date. (552) (441) recognized in Statement of financial position Consolidated financial statements Obligations in Finland include the statutory TyEL pension scheme, as well as a voluntary defined benefit plan which is closed to new entrants. Both schemes are covered by pension funds. The Financial statements for Of which classified as Prepayments for long-term 4.6 75 57 Yara International ASA employee obligations TyEL pension scheme provides for a flexible retirement age from 63 to 68 based on the employ- Of which classified as Long-term employee benefit ee’s salary each year and with accelerated earning of retirement benefits beyond the age of 63. Statement from the Board and the (627) (498) obligations A reform of the Employees Pensions Act was agreed in 2017, which will gradually increase the CEO of Yara International ASA minimum retirement age from 63 to 65 while also gradually increase the maximum retirement Auditor’s report age from 68 to 70. Further, accrual rates will change and retirement age will be linked to life expectancy (from year 2027). The voluntary pension plan regulations have also been amended in Reconciliation of alternative Expenses for long-term employee benefit obligations recognized in the statement of income performance measures in order to adapt to the revised pension legislation. the Yara Group USD millions Notes 2020 2019 Subsidiaries of Yara are also liable to retirement benefits in France, Germany, Belgium and Italy within the Eurozone. Defined benefit plans (47) (48) Defined contribution plans (29) (30) Yara sponsors a funded defined benefit pension plan for qualifying UK employees. Under the fund, Multi-employer plans (9) (9) employees are entitled to annual pensions on retirement at age 62 of 1/57th of final pensionable Termination benefits 1 (23) salary for each year of service (some members have a retirement age of 65 and accrue at a rate Other long-term employee benefits (1) (2) of 1/60). Benefits are also payable on death and following other events such as withdrawing Net expenses recognized in Statement of income (84) (113) from active service. The plan was closed for new members from 2001. Broadly, about 12% of the liabilities are attributable to current employees, 23% to deferred pensioners and 65% to current pensioners. Of which classified as Payroll and related costs 2.5 (79) (104) Of which classified as Interest expense and other 2.7 (5) (9) Other defined benefit plan obligations include employees of subsidiaries in Sweden, Trinidad and financial items South Africa.
Defined benefit plans Most defined benefit plans include benefits in case of disability, death in service and death after Yara International ASA and Norwegian subsidiaries have incurred obligations under a funded retirement, which are included in the valuation of liabilities. defined benefit plan. The pension plan was closed to new entrants in 2006 and employees below the age of 55 at that time received a paid-up policy for previously earned benefit entitlements. The provision for defined benefit plans also includes liabilities for medical plans in Great Britain, The defined benefit plan was replaced by a defined contribution plan from the same date. Further 172 Trinidad, Brazil and South Africa with a total of USD 14 million (2019: USD 16 million). Yara Integrated Report 2020 USD millions 2020 2019 Pension cost recognized in statement of income The assumptions used to value the defined benefit obligations at 31 December are used in the fol- Net interest income / (expense) on the net obligation / asset lowing year to determine the net pension cost. The discount rate is used to calculate the interest Finland - (1) income from plan assets. 01 THIS IS YARA The Netherlands (1) (1) The following items have been recognized in the Statement of income Great Britain - (1) 02 YEAR IN REVIEW Norway (1) (1)
USD millions 2020 2019 03 FROM THE BOARDROOM Other (3) (5) Total (6) (9) Current service cost (42) (37) 04 FINANCIAL STATEMENTS Contribution by employees 3 3 Consolidated financial statements Administration cost (2) (2) Remeasurement gains / (losses) recognized in other comprehensive income Past service cost - (3) Financial statements for Yara International ASA Social security cost (1) (1) USD millions 2020 2019 Payroll and related costs (41) (39) Statement from the Board and the Remeasurement gains / (losses) on obligation for defined (132) (165) CEO of Yara International ASA benefit plans Interest expense on obligation (32) (46) Remeasurement gains / (losses) on plan assets for defined Auditor’s report 98 157 Interest income from plan assets 27 37 benefit plans Reconciliation of alternative Increase in recognized net liability due to minimum funding Net interest expense on the net obligation (6) (9) (39) (8) performance measures in requirement and asset ceiling limit 1) the Yara Group Net remeasurement gains / (losses) for defined benefit plans (74) (17) Net pension cost recognized in Statement of income (47) (48)
Change in deferred tax related to remeasurement 24 8 gains / (losses) for defined benefit plans2) Pension cost recognized in the Statement of income, by origin Remeasurement gains / (losses) recognized from (1) - equity-accounted investees (net of tax) USD millions 2020 2019 Total remeasurement gains / (losses) recognized in other (51) (9) comprehensive income Payroll and related costs Finland (7) (6) 1) Yara (UK) Ltd is committed to pay an annual contribution until 2024 in order to make good a funding deficit. Present value of future contri- butions will lead to an unrecognized surplus based on current IAS 19 valuation, and as Yara does not have an unconditional right to recoup The Netherlands (17) (14) any surplus arising in the Fund, an additional liability needs to be recognized. The value of plan assets is also reduced to restrict the funded status to zero (asset ceiling limit). Great Britain (2) (2) 2) Includes impact from change in tax percentage on remeasurement gains and losses recognized in prior years. Norway (5) (5) Other (11) (13) Total (41) (39)
173 Yara Integrated Report 2020 Remeasurement gains and losses include experience adjustments, reflecting the difference be- Development of defined benefit obligations tween estimated and actual changes in obligations and plan assets during the year, as well as the
impact of change in demographic and financial assumptions when measuring the present value USD millions 2020 2019 of pension liabilities at year-end with revised assumptions. Remeasurement gains and losses are permanently recognized directly in retained earnings in the period in which they occur. 01 THIS IS YARA Defined benefit obligation at 1 January (2,198) (2,047) Current service cost (42) (37) Actuarial valuations provided the following results 02 YEAR IN REVIEW Interest cost (32) (46) Experience adjustments 9 15 USD millions 2020 2019 03 FROM THE BOARDROOM Effect of changes in financial assumptions (153) (189) Present value of fully or partially funded liabilities for defined Effect of changes in demographic assumptions 12 9 (2,210) (1,948) 04 FINANCIAL STATEMENTS benefit plans Past service cost - (3) Present value of unfunded liabilities for defined benefit plans (266) (250) Consolidated financial statements Benefits paid 94 84 Present value of liabilities for defined benefit plans (2,476) (2,198) Transfer of obligation (in)/out (3) - Financial statements for Yara International ASA Foreign currency translation on foreign plans (164) 16 Fair value of plan assets 2,048 1,836 Defined benefit obligation at 31 December (2,476) (2,198) Statement from the Board and the Adjustment in respect of minimum funding requirement (42) (26) CEO of Yara International ASA Unrecognized asset due to asset ceiling limitation (46) (19) Development of plan assets Auditor’s report Social security tax liability on defined benefit plans (18) (17) Reconciliation of alternative Net liability recognized for defined benefit plans (534) (424) performance measures in USD millions 2020 2019 the Yara Group Fair value of plan assets at 1 January 1,836 1,688 Defined benefit obligations and plan assets by origin Interest income from plan assets 27 37
2020 2019 Administration cost on plan assets (2) (2) Return on plan assets (excluding the calculated interest 98 157 USD millions Obligations Assets Obligations Assets income) Employer contributions 36 34 Finland (404) 327 (334) 310 Employees' contributions 3 3 The Netherlands (898) 787 (753) 683 Benefits paid (81) (72) Other Eurozone (317) 129 (289) 114 Transfer of plan assets in/(out) 3 - Great Britain 1) (490) 448 (444) 417 Foreign currency translation on foreign plans 128 (10) Norway 2) (314) 245 (306) 227 Fair value of plan assets at 31 December 2,048 1,836 Other (113) 67 (115) 65 Total (2,536) 2,002 (2,240) 1,816
1) Including liability for minimum funding requirement and asset ceiling adjustment 2) Including social security tax liability.
174 Yara Integrated Report 2020 Depending on local regulations, Yara may be required to ensure a certain funding level of the Yara’s defined benefit plan obligations are inherently exposed to inflation risk, interest rate risk pension plans. In the UK Yara is paying an annual contribution until 2024 in order to make good a and longevity risk. The investment strategies of the pension funds ensure diversement of invest- funding deficit determined in the actuarial valuation of 2020. In The Netherlands, an agreement ments in order to keep market volatility risk at a desired level. An exception is the pension fund is in place in which Yara will need to ensure a minimum level of funding by making additional of Yara in Finland, which has invested about 1/3 of the fair value of plan assets into shares of contribution to the fund. On the other hand, Yara will be able to recover parts of the contribution non-listed Pohjolan Voima Oy, a company producing electricity and heat for its shareholders on an 01 THIS IS YARA which has been paid to the fund, in case the funding ratio reaches a certain level. at cost-basis. The Boards of the pension funds are targeting a satisfactory level of risk and return corresponding to the maturity profile of future pension benefit payments. 02 YEAR IN REVIEW The pension funds have the legal form of foundations, independently governed by their Board of Directors or Board of Trustees. It is the responsibility of the Board to determine the investment 03 FROM THE BOARDROOM strategy, and to review the administration of plan assets and the funding level of the pension plans.
04 FINANCIAL STATEMENTS At the end of the year, the plan assets were invested as follows Consolidated financial statements Financial statements for USD millions, except percentages 2020 2020 2019 2019 Yara International ASA Cash and cash equivalents 19 1% 24 1% Statement from the Board and the CEO of Yara International ASA Shares 627 31% 515 28% Other equity instruments 39 2% 37 2% Auditor’s report High yield debt instruments 89 4% 81 4% Reconciliation of alternative Investment grade debt instruments 777 38% 711 39% performance measures in the Yara Group Properties 94 5% 72 4% Other quoted plan assets 1) 265 13% 259 14% Total investments quoted in active markets 1,910 93% 1,700 93%
Shares and other equity instruments 92 4% 95 5% Other plan assets 2) 46 2% 41 2% Total unquoted investments 138 7% 136 7%
Total plan assets 2,048 1,836
1) Other quoted plan assets include insurance policies, hybrid funds and other fund investments. 2) Other unquoted plan assets is mainly a loan to Yara Suomi Oy.
Contributions expected to be paid to the defined benefit plans for 2021 are USD 53 million (including benefits to be paid for unfunded plans). The contributions paid in 2020 were USD 49 million.
175 Yara Integrated Report 2020 Duration of liabilities at the end of the year: Expected salary increase (in %) 2020 2019
Duration of liabilities (in years) 2020 Finland 2.1 2.1 The Netherlands 2.3 2.3 01 THIS IS YARA Finland 16 Great Britain 2.8 3.7 The Netherlands 21 Norway 2.1 2.2 02 YEAR IN REVIEW Great Britain 14 Total 1) 2.3 2.6 Norway 14 03 FROM THE BOARDROOM 1) Weighted average. Total 1) 17
04 FINANCIAL STATEMENTS 1) Weighted average. Expected pension indexation (in %) 2020 2019
Consolidated financial statements Valuation of defined benefit obligations Finland 1.2 1.0 Financial statements for The defined benefit plans are valued at 31 December using updated financial and demographical The Netherlands 1.6 1.6 assumptions and taking into account the relevant economic environment of each pension plan. Yara International ASA Great Britain 2.9 3.0
Statement from the Board and the Norway The discount rate is a weighted average of the yields at the balance sheet date on high quality 0.5 1.0 CEO of Yara International ASA 1) corporate bonds, or government bonds where no deep market exists for high quality corporate Total 1.7 1.8
Auditor’s report bonds. The discount rate is adjusted by extrapolation if necessary, to take into account differences 1) Weighted average. in maturities. Reconciliation of alternative performance measures in The following table presents indicators of life expectancy of the mortality tables applied for valua- The following financial assumptions have been applied for the valuation of liabilities the Yara Group tion of the obligations, by showing expected longevity of a current employee aged 45 today from the date he or she reaches age 65, and the expected longevity of a current retiree aged 65. Discount rate (in %) 2020 2019 The following financial assumptions have been applied for the valuation of liabilities Finland 0.6 0.9 The Netherlands 0.5 1.1 Expected longevity (in years) Current employee Current retiree Great Britain 1.4 2.0 Norway 1.7 2.1 Finland 25.9 23.4 Total 1) 0.9 1.5 The Netherlands 24.2 22.4 Great Britain 24.2 22.8 1) Weighted average. Norway 24.1 23.4
176 Yara Integrated Report 2020 Sensitivity of assumptions 5.5 Trade and other payables Measurement of defined benefit obligations and pension costs requires the use of a number of assumptions and estimates. The table below indicates the sensitivity of the most significant Accounting policies assumptions applied to the defined benefit obligation, by showing the estimated result from a Trade payables are initially recognized at fair value. Subsequently they are measured at amortized reasonable increase or decrease in any one of the key assumptions applied. Holding all other cost using the effective interest method. Short-term payables are normally not discounted. 01 THIS IS YARA assumptions constant represents a limitation of the analysis, as some of the assumptions may be correlated. The methods used in preparing the analysis are consistent with previous years. Specifications 02 YEAR IN REVIEW
USD millions Notes 2020 2019 03 FROM THE BOARDROOM USD millions 2020 2019 Trade payables 1,430 1,285 04 FINANCIAL STATEMENTS Actual valuation (2,476) (2,198) Payroll and value added taxes 303 259 Other liabilities 1) 147 70 Consolidated financial statements Discount rate +0.5% (2,297) (2,044) Total 6.3 1,880 1,614 Financial statements for Discount rate -0.5% (2,682) (2,370) Yara International ASA 1) Included in Other liabilities is USD 52 million (2019: USD 11 million) regarding short-term derivative instruments (at fair value) and USD 25 million (2019: USD 20 million) regarding short-term contingent consideration. Statement from the Board and the Expected rate of salary increase +0.5% (2,496) (2,218) CEO of Yara International ASA Trade payables are non-interest-bearing and have an average term of 60 days. Payroll and Expected rate of salary increase -0.5% (2,457) (2,178) Auditor’s report value-added taxes are mainly settled bimonthly or on quarterly basis. Other payables are non-interest-bearing and normally settled within 12 months. Reconciliation of alternative Expected rate of pension increase +0.5% (2,626) (2,324) performance measures in Expected rate of pension increase -0.5% (2,342) (2,085) the Yara Group
Expected longevity +1 year (2,578) (2,280) Expected longevity -1 year (2,375) (2,116)
177 Yara Integrated Report 2020 5.6 Provisions and contingencies estimate discounted to the present value. The discounted provision is progressively unwound, with the unwinding charge presented as a finance cost. The unwinding charge takes the provision from Accounting policies its current net present value to its future end value. A provision is recognized when the Group has a present obligation (legal or constructive) follow- ing a past event, it is probable that an outflow of resources embodying economic benefits will If an obligation exits to decommission PP&E, the carrying value of the assets is increased with 01 THIS IS YARA be required to settle the obligation, and a reliable estimate can be made of the amount of the the discounted value of the obligation. This is also the case if an obligation arises during construc- obligation. tion or due to new legal requirements. The decommissioning asset is depreciated over the useful 02 YEAR IN REVIEW life of the asset. If an obligation arises as a result of day-to-day operations where the asset has The amount recognized as a provision is the best estimate of the consideration required to settle been used to produce inventory, the cost is expensed as incurred. 03 FROM THE BOARDROOM the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle Decommissioning provisions are updated when new information becomes available. 04 FINANCIAL STATEMENTS the present obligation, its carrying amount is the present value of the cash flows. Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising Consolidated financial statements A restructuring provision is recognized when the Group has developed a detailed formal plan for out of the conduct of its business. Legal claims are assessed on an individual basis and provisions the restructuring, and has raised a valid expectation that it will carry out the restructuring by start- Financial statements for are recognized if the specific claims give rise to present, probable obligations and the costs can be ing to implement the plan or announcing its main features to those affected by it. The restructur- Yara International ASA reliably measured. ing provision includes only the direct expenditures arising from the restructuring. These expendi- Statement from the Board and the tures are those that are both necessarily entailed by the restructuring and not associated with the When a legal or constructive environmental obligation arises as a result of a past event, and the CEO of Yara International ASA ongoing activities of the entity. cost can be reliably measured, a provision is recognized. Auditor’s report Present obligations arising under onerous contracts are recognized and measured as provisions. Due to EU regulations in regard to greenhouse gas emissions, Yara receives annual emissions Reconciliation of alternative An onerous contract is considered to exist where the Group has a contract where the unavoidable performance measures in rights. These emission rights can be used to settle the Group’s obligation that arises as a result of costs of meeting the obligations under it exceeds the economic benefits expected to be received the Yara Group actual emissions. Granted emission rights received in a period are initially recognized at nominal from the contract. value (nil value). Purchased emission rights are initially recognized at cost (purchase price) within intangible assets. A provision is recognized when the level of emissions exceeds the level of al- Decommissioning refers to the process of dismantling and removing equipment and site resto- lowances granted. If Yara’s emissions are less than the emission rights allocated to its operations, ration when a site is closed down. A liability is recognized as soon as a decommissioning obli- these may be sold in the market. Gains are recognized if and when such transactions occur. gation arises. The obligation can be legal or constructive, and is accounted for based on a best
178 Yara Integrated Report 2020 2020
USD millions Environmental Restructuring Legal Claims Decommission Other Total
01 THIS IS YARA Balance at 1 January 2020 77 55 25 164 54 375
02 YEAR IN REVIEW Additional provision in the year 14 3 13 76 16 122 Interest expense on liability - - 8 3 - 10 03 FROM THE BOARDROOM Unused provision (7) (9) (3) (1) (8) (28) Utilization of provision (7) (17) (4) (8) (16) (52) 04 FINANCIAL STATEMENTS Currency translation effects (1) 2 (4) 9 2 8 Balance at 31 December 2020 76 34 35 243 48 435 Consolidated financial statements Financial statements for 2019 Yara International ASA Statement from the Board and the USD millions Environmental Restructuring Legal Claims Decommission Other Total CEO of Yara International ASA Auditor’s report Balance at 1 January 2019 75 48 23 122 24 292 Reconciliation of alternative performance measures in Additional provision in the year 13 21 10 45 43 133 the Yara Group Interest expense on liability (2) - 2 - - 1 Unused provision - - (5) - (3) (9) Utilization of provision (7) (13) (4) (2) (12) (38) Currency translation effects (2) (1) - (1) 1 (4) Balance at 31 December 2019 77 55 25 164 54 375
Provisions presented in the consolidated statement of financial position
USD millions 2020 2019
Current liabilities 75 72 Non-current liabilities 360 303 Total 435 375
179 Yara Integrated Report 2020 Provisions Other provisions Environmental provisions Other include onerous contracts, liquidated damages, warranties and various other provisions. Yara’s future cost for environmental remediation depends on a number of uncertain factors, such as changes in regulations or authorities’ approval for the extent of actions. The estimates are Contingencies followed up frequently. Due to the uncertain nature to define the exact levels of pollution and Legal contingencies 01 THIS IS YARA precise needs for cleanup, it is possible that they could be revised in the near term. In addition, In connection with Yara Fertiliser India Pvt Ltd’s acquisition of Tata Chemical Ltd’s urea business, conditions which could require future expenditures may be determined to exist for various sites, stamp duty may be payable on the lease of the Babrala plant site. Yara’s position is that the 02 YEAR IN REVIEW including Yara’s major production facilities and warehouses. stamp duty on this lease is less than USD 1 million. In order to ascertain the amount of stamp duty payable, Yara sought adjudication of the amount by the local tax authorities. On 18 January 03 FROM THE BOARDROOM Provisions for environmental clean-up and asset retirement obligations relate to production facilities 2019, the authority assessed stamp duty on the lease at approximately USD 36 million. Yara is of currently in operation and facilities that are closed. The obligations relate to such actions as restoration the view that the authority’s decision is incorrect, and remains of the view that the correct amount 04 FINANCIAL STATEMENTS or rehabilitation of industrial or mining sites, disposal of contaminated material and related activities. of stamp duty is less than USD 1 million. Yara Fertiliser India Pvt Ltd is of the view that the authority’s decision is incorrect and has filed a written petition in the high court of Uttar Pradesh Consolidated financial statements Restructuring provisions in March 2019 to seek the court’s decision and affirmation of our position. State of Uttar Pradesh Financial statements for Restructuring mainly relates to closure or significant reorganization of business locations in a has filed its response to the Petition filed by Yara Fertilisers India Pvt Ltd . No date has yet been Yara International ASA country or region. The provision is a best estimate based on the detailed formal plan for the scheduled for substantial hearing of the petition. It may take up to 5 years to receive a decision business and location affected. In 2020, Yara has not recognized significant new restructuring from the Uttar Pradesh State Court. In addition to the stamp duty on the lease, Yara has also Statement from the Board and the provisions. The reduction is mainly related to the 2019 announced closure costs estimate of the sought adjudication of stamp duty in the same state on the court order for the acquisition. Yara’s CEO of Yara International ASA wholly-owned ammonia plant in Point Lisas, Trinidad. position is that the stamp duty payable is less than USD 6 million. As of today, the relevant au- Auditor’s report thority has not yet issued its decision. The provisions made for stamp duties in the Uttar Pradesh Legal claims state corresponds to Yara’s assessment. Reconciliation of alternative performance measures in Yara is involved in a number of proceedings globally concerning matters arising in connection with the Yara Group the conduct of its business. Yara does not believe such proceedings will, individually or in the Further information related to two ongoing environmental cases in Brazil, where Yara is a part due aggregate, have a significant effect on Yara’s financial position, profitability, results of operations to the acquisition of Adubos Trevo from the Trevisa Group in the year 2000, is provided below or liquidity. since it is not possible to provide a reliable estimate of the maximum potential exposure:
Decommission provisions • Yara has together with other companies related to the Trevisa Group been sued by an associa- Yara has obligations to decommission and remove installations at the end of the production tion representing approximately 1,300 potential victims in two separate lawsuits. The lawsuits period. Establishing the appropriate provisions for such obligations involve the application of are related to mine and lead industry activities performed by the company Plumbum Comércio considerable judgement and involve an inherent risk of significant adjustments. The costs of these e Representações de Produtos Mineirais e Industriais (Plumbum) in the cities Santo Amaro decommissioning and removal activities require revisions due to changes in current regulations da Purificação and Boquira in Bahia state in Brazil. Plumbum was formerly part of the Trevisa and technology while considering relevant risks and uncertainties. Most of the removal activities Group. Adubos Trevo has not been involved in any of the activities included in the lawsuits. The are many years into the future, and the removal technology and costs are constantly changing. lawsuits include claims for various personal losses, damage to properties, institution of relief The estimates include assumptions of the time required and can vary considerably depending on funds, environmental restoration and clean-up activities. The lawsuits were filed in 2011 and the assumed removal complexity. Moreover, changes in the discount rate and currency exchange 2012 but are still in the initial phase. Yara denies liability for any potential damage caused by rates may impact the estimates significantly. As a result, the initial recognition of the liability and the activities of Plumbum and has not made any provision for the claims. the capitalized cost associated with decommissioning and removal obligations, and the sub- • Yara is together with 22 other companies, defendants in a lawsuit filed by São Paulo Public sequent adjustment of these balance sheet items, involve the application of judgement. Most Attorney in 1985 with a claim for compensation for environmental damage related to former significant decommissioning provisions relate to contractual obligations for operations on leased activities by the defendants in the Cubatão industrial district. The defendants deny the claim land, the main ones being plants in Australia and France. The increase in decommission provisions on the basis that necessary actions have already been taken to recover potential damages from during 2020 is mainly due to reduced discount rates in Australia. former activities. In September 2017, the court of first instance ruled against the defendants 180 determining that the defendants were jointly liable to repair the damage. The nature of and Yara Integrated Report 2020 amount of potential damages have not been determined and will be calculated by an expert. Uncertain tax treatments Yara has made a provision related to this case of USD 1.8 million. Yara and the other defen- In 2020, Yara realized taxable losses due to disposal of shares and when restructuring the corpo- dants have appealed the decision. rate holding structure. Due to uncertainty of the tax treatment related to the losses, tax assets of USD 89 million are not recognized in the financial statements. In addition to these cases, Yara is party to a number of lawsuits related to laws and regulations in 01 THIS IS YARA various jurisdictions arising out of the conduct of its business. Several of these cases have been At year-end 2020, Yara has an income tax provision of USD 43 million related to an ongoing tax ongoing for a number of years, and the timing of possible outflows is uncertain. While acknowl- case. The majority of the provision was recognized in 2019 due to a court ruling against one of 02 YEAR IN REVIEW edging the uncertainties of litigation, Yara is of the opinion that based on the information currently Yara’s subsidiaries, and the provision is considered to cover the full exposure. In addition to the available, these matters will be solved without material adverse effect. The total estimate of the income tax provision, Yara has recognized provision for related interest charges of USD 16 million. 03 FROM THE BOARDROOM financial effect in the unlikely event that all should have a negative outcome, is USD 48 million, Yara has appealed the ruling. mainly related to cases in Brazil. 04 FINANCIAL STATEMENTS On 21 and 22 January 2020 the Spanish competition authority (CNMC) visited the premises of 5.7 Contractual obligations Consolidated financial statements Yara Iberian S.A.U. (Spain). Yara Iberian cooperated with the officials during the site visit. The Take-or-pay and Long-term contracts Financial statements for CNMC is now conducting a preliminary inquiry into possible infringements of the Spanish Com- Yara has entered into take-or-pay and long-term contracts providing for future payments to trans- Yara International ASA petition Act. As such, Yara is not under any formal investigation and no employees are formally portation capacity, raw materials and energy. Yara has marketing and off-take agreements with suspected in the case which is still being preliminary assessed by the CNMC. Statement from the Board and the some of its joint operations, see note 4.4. CEO of Yara International ASA Tax contingencies The non-cancellable future obligations at 31 December 2020 (undiscounted amounts) Auditor’s report In relation to an ongoing tax dispute and to safeguard their taxation rights, the Dutch tax authorities issued in 2018 a new tax assessment for business restructuring (“exit tax assessment”). The tax Reconciliation of alternative USD millions Total performance measures in assessment would increase the tax cost with USD 500 million, plus USD 200 million in accumu- lated interest. It is Yara’s position that the tax assessment is unreasonable and unfounded, and no the Yara Group 2021 418 provision has been made for the exit tax claim. The tax authorities principal claim is significantly lower and Yara has considered that claim separately from the exit tax assessment. Yara expects 2022 191 that the exit tax assessment will not trigger any immediate payment and that tax payments will be 2023 122 deferred until the case has been fully resolved or the tax assessment has been withdrawn. 2024 71 2025 65 Several subsidiaries are engaged in juridical and administrative proceedings related to various disputed Thereafter 632 tax matters where the probability of cash outflow is not considered probable. A majority of these con- Total 1,498 tingencies are related to taxes in Brazil, with an estimated maximum exposure of approximately USD 105 million. Tax contingencies outside Brazil and excluding the above-mentioned exit tax assessment in the Netherlands have an estimated maximum exposure of approximately USD 85 million. Future “take-or-pay” obligations are included in the table above only if they are non-cancellable and the contractually agreed pricing is fixed or may otherwise deviate from observable market In 2019, Yara International ASA received a notification and request for information from the Norwe- prices at the time of delivery. gian Tax Authorities in relation to a transfer price audit. In the notification and request for informa- tion, the Tax Authorities have stated that they consider changing the company’s tax assessment for Yara did not need to pay any significant amount to fulfill take-or-pay clauses in 2020. the years 2015, 2016 and 2017. The Tax Authorities have neither disclosed any potential amount nor provided guidance on how a potential change will impact the tax assessment for these years. For further information regarding future obligations, see note 5.4 for future obligations related to pensions, note 5.6 for provisions and contingencies and 4.5 for future commitments related to lease arrangements. 181 Yara Integrated Report 2020 5.8 Secured debt and guarantees Off-balance sheet guarantees consist mainly of commercial guarantees related to contract USD millions 2020 2019 obligations (Bid Bonds, Performance Guarantees and Payment Guarantees) and various man- datory public guarantees (Customs Guarantees, Receivable VAT Guarantees). These guarantees 01 THIS IS YARA Amount of secured debt 26 26 are issued on behalf of Yara International ASA, its subsidiaries and equity-accounted investees. The guarantor could be required to perform in the event of a default of a commercial contract or 02 YEAR IN REVIEW non-compliance with public authority regulations. Assets used as security for debt
Machinery and equipment, etc. 4 4 Guarantees of debt issued on behalf of consolidated companies are not included since the drawings 03 FROM THE BOARDROOM Buildings and structural plant 25 23 under such credit lines are included in the consolidated statement of financial position. The guarantee Total 29 27 obligation under such guarantees is at any time limited to the amount drawn under the credit facility. 04 FINANCIAL STATEMENTS
Guarantees related to pension liabilities are included to the extent such guarantees exceed the Consolidated financial statements Assets used as security for non-financial liabilities liability included in the consolidated statement of financial position. Financial statements for Buildings and structural plant 43 22 Yara International ASA Total 43 22 Guarantees issued to public authorities covering tax and VAT liabilities are not included as these Statement from the Board and the obligations are already included in the consolidated statement of financial position. CEO of Yara International ASA Guarantees (off-balance sheet) Contingent liabilities related to the de-merger from Norsk Hydro ASA Contingency for discounted bills - 1 Auditor’s report Yara is contingently liable for unfunded pension liabilities accrued prior to the consummation of Contingency for sales under government schemes 57 57 Reconciliation of alternative the de-merger from Norsk Hydro ASA (Hydro) as a matter of the joint and several liability provid- performance measures in Non-financial parent company guarantees 668 723 ed by Norwegian law. Hydro’s unfunded pension liabilities, calculated in accordance with Hydro’s the Yara Group Non-financial bank guarantees 173 236 accounting policies, amounted to approximately NOK 2 billion at de-merger March 24, 2004 and Total 899 1,016 have been reduced by payments thereafter.
182 Yara Integrated Report 2020 6 Financial Risk
6.1 Financial risks 01 THIS IS YARA Risk management policies There were no principal changes in the Group’s approach to capital management during the years Risk management in Yara is based on the principle that risk evaluation is an integral part of all ending 31 December 2020 and 31 December 2019. Yara’s liquidity surplus, kept as short-term 02 YEAR IN REVIEW business activities. Yara’s strategic approach is to determine appropriate risk levels or limits for bank deposits, increased significantly in 2020 compared with the year before, primarily after the main risks and to constantly maintain and develop tools and procedures for monitoring the receipt of the proceeds from the Qafco divestment (see n o t e 7.1 Disposal of investments). 03 FROM THE BOARDROOM associated exposures. The Group’s policies, approved by the Board of Directors, thus provide written principles on funding risk, currency risk, interest rate risk, credit risk, and the investment Funding risk 04 FINANCIAL STATEMENTS of excess liquidity. In general, risks arising from operational activities may either be accepted The capital structure of the Group consists of interest-bearing debt as disclosed in note 5.3 Inter- or reduced. The policies restrict transactions that will increase the Group’s exposure beyond the est-bearing debt, cash and cash equivalents as disclosed in note 3.4 Cash and cash equivalents Consolidated financial statements level stemming from operations. plus equity attributable to equity holders of the parent, comprising paid-in capital and retained Financial statements for earnings as disclosed in note 5.1 Share information and statement of changes in equity. Yara International ASA Yara’s Executive Management is responsible for reviewing and operationalizing the board defined policies, while the operating segments and expert organizations act as risk owners. The financial Yara is focused on maintaining a sound funding structure. Main elements of the funding strategy Statement from the Board and the risks related to the operations of the Group are thus monitored and managed by Yara’s Finance, are to keep a long-term debt base and to uphold the security and flexibility obtained through CEO of Yara International ASA Treasury & Insurance function through internal risk reports that analyze each exposure by degree using diversified capital sources, avoiding dependency on single institutions or markets. Auditor’s report and magnitude of risk. These risks include market risks such as currency and interest rate risk, Reconciliation of alternative credit risk and liquidity risk. The Finance, Treasury & Insurance function reports regularly to the Yara does not have specific debt ratio targets and the only financial covenant is to have a debt performance measures in Group’s Executive Management. to equity ratio, calculated as net interest-bearing debt divided by shareholders’ equity plus the Yara Group non-controlling interests, below 1.4. At the end of 2020, the ratio was 0.35 compared with Based on the overall evaluation of risk, Yara may seek to reduce its inherent exposures by using 0.42 at the end of 2019. The Group is not subject to any externally imposed capital requirements. insurance policies, trade finance contracts, guarantees or derivative instruments such as forward con- tracts, options and swaps. The use of such instruments is also governed by Board approved policies. Through its financial structure, Yara has the necessary flexibility to capture the right industrial opportunities when they arise. As such opportunities typically materialize in periods character- Yara may designate and document the use of certain derivatives and other financial assets or ized by industry margins and earnings below peak levels, Yara will seek to maintain adequate liabilities as hedging instruments against changes in fair value of recognized assets and liabilities financial capacity throughout the business cycle. Yara aims to maintain a long-term mid invest- (fair value hedges), highly probable forecast transactions (cash flow hedges) and net investments ment grade rating level, i.e. BBB according to Standard & Poor’s methodology and Baa2 accord- in foreign operations (net investment hedges). The prospective effectiveness of any such hedge is ing to Moody’s methodology. During 2020, Yara did maintain both the Baa2 rate from Moody’s assessed at inception and verified on a quarterly basis. Derivatives not designated in a hedging re- and the BBB rate from Standard & Poor’s. lationship are classified as undesignated derivatives and acquired and managed within the frame- work and policies defined by the Board of Directors also when hedge accounting is not applied.
183 Yara Integrated Report 2020 Currency risk to around USD 1,900 million at the end of the year (2019: increased gradually from around USD Prices of Yara’s most important products are either directly denominated or determined in US dol- 2,000 million to around USD 2,600 million during the year). A certain portion of the total debt is lars. In markets outside the US, local prices will generally adjust to fluctuations in the US dollar ex- kept in various local currencies in order to finance local currency exposed business positions. change rate, however with a certain time lag. Yara’s raw materials costs, such as natural gas used in the production of ammonia, are either denominated in US dollars or highly correlated to changes Yara thus primarily manages currency risks by adjusting the composition of the debt or liquidity 01 THIS IS YARA in the US dollar exchange rate. In order to hedge Yara’s long-term exposure to fluctuations in the portfolios to changes in Yara’s overall risk exposure. Derivative instruments may also be used to US dollar exchange rate, Yara incurs most of its debt in US dollars. During the first eight months of manage currency risk related to forecast purchases and sales or to offset short-term liquidity need 02 YEAR IN REVIEW 2020, the part of Yara’s US dollar debt constituting a hedge of future earnings was kept between in one currency with surplus liquidity in another currency. Such forward contracts are not designat- USD 2,600 million and USD 2,800 million. The receipt of the proceeds from the Qafco divest- ed as hedging instruments for accounting purposes. Changes in fair value are therefore recognized 03 FROM THE BOARDROOM ment reduced the hedge to around USD 1,400 million, whereafter it was gradually increased again in the income statement.
04 FINANCIAL STATEMENTS Sensitivity - net income Consolidated financial statements USD millions 2020 2019 Financial statements for Yara International ASA A 10% weakening 1) of the US dollar at the reporting date would have increased/(decreased) net income by 181 241 Statement from the Board and the A 10% weakening 1) of the euro at the reporting date would have increased/(decreased) net income by (214) (263) CEO of Yara International ASA 1) Against functional currencies. Auditor’s report Reconciliation of alternative All other variables remain constant. This analysis is done for illustrative purposes only, taking into consideration only the effect on the value of financial instruments in the balance sheet as at year- performance measures in end. Since all other variables are assumed to remain constant, the analysis does not reflect subsequent effects on operating income. The analysis was performed on the same basis for 2019. A 10% the Yara Group strengthening of the currencies at the reporting date would have had the opposite effect of the amounts shown above.
Sensitivity - Other comprehensive income
USD millions 2020 2019
A 10% weakening 1) of the Norwegian krone at the reporting date would have increased/(decreased) other comprehensive income by (250) (259) A 10% weakening 1) of the Canadian dollar at the reporting date would have increased/(decreased) other comprehensive income by (106) (116) A 10% weakening 1) of the Brazilian real at the reporting date would have increased/(decreased) other comprehensive income by (54) (58) A 10% weakening 1) of the euro at the reporting date would have increased/(decreased) other comprehensive income by (58) (7)
1) Against US dollar (presentation currency of the Group).
184 Yara Integrated Report 2020 This analysis is done for illustrative purposes only, taking into consideration only the effect on Interest rate risk equity in foreign operations as at year-end. Since all other variables are assumed to remain Yara has a defined framework for fair value risk arising from exposure towards fixed interest constant, the analysis does not reflect subsequent effects on equity. The analysis was performed rates. In accordance with that framework, all bank loans have been borrowed at floating rates. A on the same basis for 2019. portion of the bond debt has been retained at fixed interest rates, while the remaining part of the bond debt has been converted to floating rates through interest rate swaps and cross-currency 01 THIS IS YARA swaps. Consequently, the interest expense related to the converted (hedged) part of the bond debt will fluctuate in line with market changes. At the reporting date, the interest rate exposure 02 YEAR IN REVIEW arising from the bonds issued is summarized in the table below.
03 FROM THE BOARDROOM
04 FINANCIAL STATEMENTS Conversion to floating rates Carrying amounts 2020 Carrying amounts 2019
Denominated Fixed Basis for Receive Fixed Floating Fixed Floating Consolidated financial statements amounts interest exposure fixed interest Pay floating interest interest interest interest USD millions, except percentages Notes Maturity 2020 rate hedged payments interest rates 1) rate rate rate rate Financial statements for Yara International ASA Floating interest rate bonds Statement from the Board and the NOK (Coupon NIBOR + 0.75%) 5.3 2022 147 - 147 - 142 CEO of Yara International ASA SEK (Coupon STIBOR + 1.00%) 5.3 2022 55 - 55 - 48 Auditor’s report Reconciliation of alternative Fixed interest rate bonds performance measures in NOK (Coupon 2.55%) 5.3, 6.2 2021 82 2.55% 82 2.55% USD LIBOR 3M + 1.14% - 83 - 79 the Yara Group SEK (Coupon 1.10%) 5.3, 6.2 2022 98 1.10% 98 1.10% USD LIBOR 3M + 1.00% - 99 - 86 NOK (Coupon 3.00%) 5.3, 6.2 2024 70 3.00% 70 3.00% USD LIBOR 3M + 1.33% - 73 - 68 NOK (Coupon 2.45%) 5.3, 6.2 2024 117 2.45% 117 2.45% USD LIBOR 3M + 1.18% - 120 - 111 USD (Coupon 3.80%) 5.3 2026 500 3.80% - 499 - 498 - NOK (Coupon 2.90%) 5.3, 6.2 2027 117 2.90% 117 2.90% USD LIBOR 3M + 1.44% - 122 - 111 USD (Coupon 4.75%) 5.3 2028 1,000 4.75% - 997 - 996 - USD (Coupon 3.15%) 5.3 2030 750 3.15% - 746 - - - Total unsecured debenture bonds 2,937 486 2,241 699 1,495 645
1) Through a combination of interest rate swaps and cross-currency swaps.
185 Yara Integrated Report 2020 Interest rate profile of the Group’s interest-bearing financial instruments
USD millions Notes 2020 2019
01 THIS IS YARA Outstanding long-term interest-bearing debt (including current portion) 5.3 3,503 3,096 Portion of bonds with fixed interest rate 5.3 2,241 1,495 02 YEAR IN REVIEW Outstanding long-term interest-bearing debt (including current portion) less portion of bonds with fixed interest rate 1,262 1,601
03 FROM THE BOARDROOM Sensitivity
04 FINANCIAL STATEMENTS USD millions 2020 2019
Consolidated financial statements An increase of 100 basis points in USD interest rates at the reporting date would have increased/(decreased) net income by 4 (15) Financial statements for An increase of 100 basis points in NOK interest rates at the reporting date would have increased/(decreased) net income by (3) - Yara International ASA Statement from the Board and the CEO of Yara International ASA All other variables remain constant. This analysis is done for illustrative purposes only, taking into Specific risks associated with the upcoming interest rate benchmark reform Auditor’s report consideration only the effect on financial instruments in the balance sheet as at year-end. The The Group is exposed to NIBOR, STIBOR and USD LIBOR (collectively ‘IBOR’) interest rate analysis was performed on the same basis for 2019. A decrease of 100 basis points at the report- benchmarks subject to the upcoming interest rate benchmark reform. In order to prepare an ac- Reconciliation of alternative ing date would have had the opposite effect of the amounts shown above. tion plan and ensure a smooth transition to alternative benchmark rates, Yara Finance, Treasury & performance measures in Insurance has established an IBOR transition program. Risks hitherto identified include, but may the Yara Group not be limited to, the items listed in the below table.
Risk Potential impact
Lack of standardized alternative term rates Cash flow uncertainty, operational challenges Economic difference vs. IBORs and alternative rates Changes in fair value of affected contracts Different speed of transition across products and currencies Basis risk on hedge accounting relations Operational adjustments required Upgrade of IT systems, renegotiation of agreements
Most recent indication from the USD LIBOR benchmark administrator is that publication of 1 week and 2 month rates will cease on 31 December 2021 and other tenors on 30 June 2023. For NIBOR and STIBOR rates there are thus far no indicated cessation dates. Yara has currently no exposure to the USD LIBOR tenors where publication is expected to cease in 2021.
186 Yara Integrated Report 2020 Financial contracts with an IBOR benchmark reference as at 31 December 2020 of the Group. Credit risk arising from the inability of the counterparty to meet the terms of Yara’s derivative financial instruments is generally limited to amounts, if any, by which the counterpar- Denominated amounts ty’s obligations exceed Yara’s obligations. USD NOK SEK USD millions Notes LIBOR NIBOR STIBOR The exposure to credit risk is represented by the carrying amount of each class of financial assets, 01 THIS IS YARA including derivative financial instruments, recorded in the statement of financial position and as Bonds disclosed in note 6.3 Financial instruments. 02 YEAR IN REVIEW Pay interest 5.3 - (147) (55) Receive interest - - - Yara’s policy is to enter into financial instruments with various international banks with estab- 03 FROM THE BOARDROOM lished limits for transactions with each institution. Yara also has agreed limits for credit exposure Bank loans (collateral agreements) with most of its main banks. At the end of the reporting period, Yara had 04 FINANCIAL STATEMENTS Pay interest 5.3 (559) - - deposited USD 25.6 million (2019: USD 74.8 million) in cash with its counterparties to mitigate exposure from financial liabilities covered by such agreements. These deposits are reported as Receive interest - - - Consolidated financial statements “other current assets” in the consolidated statement of financial position. Collateral deposits are made at overnight terms and required collateral is reassessed twice every month. Financial statements for Interest rate swaps Yara International ASA Pay interest 6.2, 6.3 - (387) (98) Due to Yara’s geographical spread and significant number of customers there are no significant Statement from the Board and the Receive interest - - - concentrations of credit risk. Therefore, Yara does not expect to incur material credit losses on its CEO of Yara International ASA customer portfolio or on its financial instruments. Auditor’s report Cross-currency swaps Pay interest 6.3 (687) - - Yara may undertake a number of measures to reduce credit risk of particular receivables. Such Reconciliation of alternative performance measures in Receive interest 6.3 - 534 153 measures include letters of credit, bank guarantees and credit insurance agreements. The effect the Yara Group Total exposure to IBOR rates (1,246) - - of credit risk reduction from these measures is not considered to be material for the Group.
Liquidity risk None of these contracts include fallback provisions in case the referenced benchmark interest Yara manages liquidity risk by maintaining adequate reserves and committed bank facilities and rate ceases to be available. Yara therefore monitors the output from the various working groups by continuously monitoring forecasted and actual cash flows. Yara aims at an even debt repay- managing the transition to new benchmark rates carefully and will implement appropriate fallback ment schedule and has secured committed undrawn credit facilities to provide sufficient reserves language in due course. to meet unforeseen liquidity needs.
Credit risk Undrawn facilities that the Group has at its disposal are presented in note 5.3 Interest-bearing Yara has a well-established system for credit management with established limits at both cus- debt. tomer and country level. Yara’s geographically diversified portfolio reduces the overall credit risk
187 Yara Integrated Report 2020 Contractual maturities of financial liabilities, including estimated interest payments
31 December 2020
01 THIS IS YARA Carrying Contractual 6 months More than USD millions amount cash flows On demand or less 6-12 months 1-2 years 2-5 years 5 years
02 YEAR IN REVIEW Non-derivative financial liabilities Short-term interest-bearing debt (345) (367) (39) (323) (5) - - - 03 FROM THE BOARDROOM Long-term interest-bearing debt 1) (3,503) (4,261) - (65) (168) (612) (747) (2,668) Accrued interest expense (8) (8) - (8) - - - - 04 FINANCIAL STATEMENTS Trade payables (1,431) (1,432) (7) (1,392) (33) - - - Consolidated financial statements Payroll and value added taxes (303) (303) (1) (273) (29) - - - Other short-term liabilities (96) (96) - (69) (27) - - - Financial statements for Yara International ASA Other long-term liabilities (92) (92) - - - (71) (6) (14) Statement from the Board and the CEO of Yara International ASA Derivative financial instruments Freestanding financial derivatives (67) Auditor’s report Outflow (2,825) - (2,186) (99) (191) (218) (130) Reconciliation of alternative Inflow 2,750 - 2,156 87 181 203 123 performance measures in the Yara Group Commodity derivatives (6) Outflow (8) - (1) (7) - - - Inflow ------Hedge designated derivatives 12 Outflow (35) - (3) (3) (6) (16) (6) Inflow 48 - - 12 9 20 7
Total (5,839) (6,628) (46) (2,163) (275) (690) (765) (2,689)
1) Includes current portion of long-term interest-bearing debt amounting to USD 132 million.
See note 4.5 Leases for contractual maturities of lease liabilities.
188 Yara Integrated Report 2020 31 December 2019
Carrying Contractual 6 months More than USD millions amount cash flows On demand or less 6-12 months 1-2 years 2-5 years 5 years 01 THIS IS YARA Non-derivative financial liabilities 02 YEAR IN REVIEW Short-term interest-bearing debt (494) (519) (40) (383) (97) - - - Long-term interest-bearing debt 1) (3,096) (3,731) (2) (426) (78) (223) (1,150) (1,852) 03 FROM THE BOARDROOM Accrued interest expense (14) (16) - (14) - - (2) -
04 FINANCIAL STATEMENTS Accounts payable (1,285) (1,302) (3) (1,270) (29) - - - Payroll and value added taxes (259) (259) (1) (226) (32) - - - Consolidated financial statements Other short-term liabilities (59) (59) - (52) (7) - - - Financial statements for Other long-term liabilities (133) (144) - (1) (19) (45) (67) (13) Yara International ASA Statement from the Board and the Derivative financial instruments CEO of Yara International ASA Freestanding financial derivatives (79) Auditor’s report Outflow (1,139) - (343) (12) (112) (539) (133) Inflow 1,052 - 334 9 96 489 124 Reconciliation of alternative performance measures in Commodity derivatives (20) the Yara Group Outflow (23) - (2) (2) (10) (10) - Inflow ------Hedge designated derivatives (7) Outflow (64) - (6) (6) (12) (28) (11) Inflow 58 - - 11 11 25 10
Total (5,446) (6,147) (45) (2,388) (262) (295) (1,281) (1,875)
1) Includes current portion of long-term interest-bearing debt amounting to USD 398 million.
189 Yara Integrated Report 2020 Derivative instruments 6.2 Hedge accounting
A description of the Group’s general risk management policies and principles can be found in USD millions Notes 2020 2019 note 6.1 Financial risks.
01 THIS IS YARA Total fair value of derivatives Accounting policies Forward foreign exchange contracts 6.3 (38) (7) Yara applies hedge accounting according to IFRS 9 and designates certain derivatives as either 02 YEAR IN REVIEW Cross-currency swaps 6.3 (29) (72) hedges of the fair value of recognized assets or liabilities (fair value hedges), hedges of foreign Interest rate swaps designated for hedging 6.3 12 (7) currency risk of recognized assets or liabilities (cash flow hedges), or hedges of net investments 03 FROM THE BOARDROOM Embedded commodity derivatives 6.3 (6) (20) in foreign operations. Balance 31 December (61) (106) 04 FINANCIAL STATEMENTS Changes in fair value of financial instruments designated as fair value hedges are recognized in the consolidated statement of income. The carrying amount of the hedged item is adjusted for Consolidated financial statements Derivatives presented in the statement of financial changes in the fair value attributable to the hedged risk. position Financial statements for Non-current assets 15 1 Changes in fair value of financial instruments used as hedging instruments in cash flow hedges Yara International ASA Current assets 3 - are recognized in equity until the hedged transactions are recognized. Any ineffective part of a Statement from the Board and the Non-current liabilities (28) (96) hedge is recognized in the Consolidated statement of income. CEO of Yara International ASA Current liabilities (52) (11) Changes in fair value of financial instruments used as hedges of net investment in foreign Auditor’s report Balance 31 December (61) (106) operations are recognized as other comprehensive income. Any ineffective part of a hedge is Reconciliation of alternative recognized in the Consolidated statement of income. performance measures in Outstanding committed forward foreign exchange contracts at 31 December the Yara Group Hedge accounting ceases when the hedging instrument expires, is sold, terminated or exercised. Hedge accounting also ceases if the hedge relationship for some reason no longer fulfills the USD millions 2020 2019 requirements for hedge accounting.
Forward foreign exchange contracts, notional amount 1,369 427 Fair value hedges In December 2014, Yara designated a portfolio of long-term NOK fixed-to-floating interest rate All outstanding forward foreign exchange contracts at 31 December 2020 have maturity in 2021, swaps as hedging instruments. The hedged risk is the change in fair value due to changes in risk- except non-deliverable forward contracts totaling USD 59 million that mature in 2022. Buy free interest rates (NIBOR) of the NOK 700 million and NOK 600 million fixed rate bond debt positions are mainly in US dollars against Norwegian kroner or Brazilian reals. Sell positions are in from 2014. various operating currencies towards Norwegian kroner. In December 2017, Yara designated a portfolio of long-term NOK and SEK fixed-to-floating interest rate swaps as hedging instruments. The hedged risk is the change in fair value due to changes in risk-free interest rates (NIBOR) of the NOK 1,000 million and NOK 1,000 million fixed rate bond debt and the change in fair value due to changes in risk-free interest rates (STIBOR) of the SEK 800 million fixed rate bond debt, all from 2017.
Subsequent to initial recognition, Yara measures interest-bearing borrowings at amortized cost. However, the designation of interest rate swaps as hedging instruments and use of hedge 190 accounting enables Yara to include the fair value of changes in interest rates in the carrying value Yara Integrated Report 2020 of the bonds. The corresponding adjustment in the Consolidated statement of income offsets Net investment hedges the effects of the recognized interest rate swaps, leading to less volatility in net income. At 31 December 2020, Yara has designated in total USD 815 million (2019: USD 930 million) of its USD denominated interest-bearing debt as hedges of net investments in foreign (USD based) As the key parameters of the hedging instruments (interest basis, inception dates and maturity operations. The hedging instruments comprise USD denominated bonds, term loans and the dates) are identical to the respective hedged items, no ineffectiveness has been identified. currency component of a portion of the Group’s cross-currency swap portfolio. 01 THIS IS YARA
Cash flow hedges The designation of interest-bearing debt as hedges of net investments leads to changes of 02 YEAR IN REVIEW Yara had no cash flow hedges in 2020 or 2019. However, Yara has used derivative instruments to foreign currency translation (gain/loss) being recognized in the Consolidated statement of hedge cash flows of planned transactions in the past and may do so also in the future. comprehensive income instead of in the Consolidated statement of income. 03 FROM THE BOARDROOM As both the hedged net investments and the hedging instruments are sensitive only to 04 FINANCIAL STATEMENTS fluctuations in the USDNOK spot rate, no ineffectiveness has been identified.
Consolidated financial statements Financial statements for Effect on financial position and performance in 2020 Yara International ASA Change in value Hedge Accumulated amount Line item in the Line item in the of the hedged This year's ineffectiveness Carrying amount of of hedge adjustment Consolidated statement Consolidated statement item used for change in recognized in Statement from the Board and the the hedged item 1) on the hedged item 4) of financial position of financial position calculating value of Consolidated CEO of Yara International ASA Hedge in which the hedged in which the hedging hedge the hedging statement of USD millions Currency rates Assets Liabilities Assets Liabilities item is included instrument is included ineffectiveness instrument income Auditor’s report Reconciliation of alternative Fair value hedges performance measures in Interest rate risk the Yara Group - Fixed interest, NOK bonds (2014) NOK 3M NIBOR - 156 - 4 Long-term interest-bearing debt Other long-term liabilities (5) 5 - - Fixed interest, NOK bonds (2017) NOK 3M NIBOR - 242 - 8 Long-term interest-bearing debt Other long-term liabilities (14) 14 - - Fixed interest, SEK bonds (2017) SEK 3M STIBOR - 99 - 1 Long-term interest-bearing debt Other long-term liabilities (1) 1 -
Net investment hedges Foreign exchange risk Spot Long-term - Net equity in subsidiaries 2), 5) USD 815 - - 187 Retained earnings 22 (22) - USDNOK interest-bearing debt 3)
1) The designated nominal amounts of the hedging instruments equal the nominal amounts of the hedged items. 2) Amounts are after-tax. Seenote 2.8 Income tax expense for the tax effect. 3) Includes USD 1 million related to the part of the hedging instrument (cross-currency swap) which refers to the line item other long-term liabilities. 4) Included in the carrying amount of the hedged item on fair value hedges. 5) The change in value columns include the effect from a USD 115 million hedging relation discontinued in August 2020.
For either hedging category, there are no balances remaining from a hedging relationship for which hedge accounting is no longer applied.
191 Yara Integrated Report 2020 Effect on financial position and performance in 2019 Change in value Hedge Accumulated amount Line item in the Line item in the of the hedged This year's ineffectiveness Carrying amount of of hedge adjustment Consolidated statement Consolidated statement item used for change in recognized in the hedged item 1) on the hedged item 4) of financial position of financial position calculating value of Consolidated Hedge in which the hedged in which the hedging hedge the hedging statement of 01 THIS IS YARA USD millions Currency rates Assets Liabilities Assets Liabilities item is included instrument is included ineffectiveness instrument income
02 YEAR IN REVIEW Fair value hedges Interest rate risk 03 FROM THE BOARDROOM - Fixed interest, NOK bonds (2014) NOK 3M NIBOR - 147 1 - Long-term interest-bearing debt Other long-term liabilities 1 (1) - - Fixed interest, NOK bonds (2017) NOK 3M NIBOR - 221 6 - Long-term interest-bearing debt Other long-term liabilities - - - 04 FINANCIAL STATEMENTS - Fixed interest, SEK bonds (2017) SEK 3M STIBOR - 86 - - Long-term interest-bearing debt Other long-term liabilities - - -
Consolidated financial statements Net investment hedges Financial statements for Foreign exchange risk Yara International ASA 2) Spot Long-term - Net equity in subsidiaries USD 930 - - 209 Retained earnings 3) (9) 9 - Statement from the Board and the USDNOK interest-bearing debt CEO of Yara International ASA 1) The designated nominal amounts of the hedging instruments equal the nominal amounts of the hedged items. 2) Amounts are after-tax. Seenote 2.8 Income tax expense for the tax effect. Auditor’s report 3) Includes USD 1 million related to the part of the hedging instrument (cross-currency swap) which refers to the line item other long-term liabilities. Reconciliation of alternative 4) Included in the carrying amount of the hedged item on fair value hedges. performance measures in the Yara Group For either hedging category, there are no balances remaining from a hedging relationship for which hedge accounting is no longer applied.
192 Yara Integrated Report 2020 6.3 Financial instruments Receivables and deposits See note 3.2 for information on Trade receivables and note 3.4 for Cash and Cash equivalents. Accounting policies Other short-term and long-term receivables and deposits are initially recognized at fair value. A financial instrument is any contract that gives rise to a financial asset of one entity and a Subsequently they are measured at amortized cost using the effective interest method. Short- financial liability or equity instrument of another entity. Financial assets and financial liabilities term items are normally not discounted. 01 THIS IS YARA are recognized when the Group becomes party to the contractual obligations of the instrument. The carrying amounts of receivables and deposits are adjusted for expected credit losses and 02 YEAR IN REVIEW Under IFRS 9 Financial Instruments, Yara classifies financial assets based on the business are considered to represent reasonable estimates on fair value. Interest-free receivables are model in which they are managed and their contractual cash flows. The principal categories are discounted if it has a material impact on fair value. Yara records 12-months expected credit 03 FROM THE BOARDROOM amortized cost, fair value through other comprehensive income (FVOCI) and fair value through losses if there has not been any significant increase in credit risk since initial recognition (the profit or loss (FVTPL). general approach). If there has been a significant increase in credit risk, lifetime expected credit 04 FINANCIAL STATEMENTS loss is recorded. The 12-months expected credit loss reflect loss from default events that are Derivatives possible within the next 12 months. They are calculated as the Probability of Default based on Consolidated financial statements The Group uses derivative financial instruments to hedge exposure against currency risk, interest the credit rating of different counterparts multiplied with the Loss Given Default based on listed rate risk and commodity price risk arising in operating, financing and investment activities. These Financial statements for corporate bonds. If a significant increase in credit risk since initial recognition is identified, a derivatives are initially recognized at fair value and subsequently measured at fair value through Yara International ASA lifetime expected credit loss for the specific receivable or deposit will be recognized based on an profit or loss at each balance sheet date. Embedded derivatives are separated and treated as individual assessment. The credit risk has normally increased significantly when a receivable is Statement from the Board and the derivatives when the risks and characteristics of the derivative are not closely related to the defaulted. CEO of Yara International ASA host contract, and the host contract is not measured at fair value with changes in fair value Auditor’s report recognized in the consolidated statement of income. Embedded derivatives may refer to financial A receivable is considered to be in default when it is overdue and enforcement activities have transactions and sale and purchase transactions for gas, ammonia and other commodities. started. If there is a reasonable expectation that enforcement activities will not lead to recovery, Reconciliation of alternative performance measures in the receivable is credit impaired. The receivable is written off when enforcement activities lead Fair value on derivatives is measured based on quoted market prices when these are available. the Yara Group to objective evidence of the receivable being irrecoverable. When quoted prices from active markets are not available, the Group estimates fair value by using valuation models that make maximum use of observable market data. The resulting Yara’s expected credit loss on receivables and deposits is limited. As a result, disclosures are change in fair value is recognized immediately in the statement of income. If the derivative reduced due to materiality. is designated and effective as a hedging instrument, the timing of the recognition in the consolidated statement of income depends on the nature of the hedge relationship. A derivative Equity instruments is classified as non-current if the remaining maturity of the derivative is more than 12 months, The Group has equity shares within the scope of IFRS 9 to a limited extent. These are and as current if the remaining maturity of the derivative is less than 12 months. initially recognized at fair value. Subsequently they are measured at fair value through other comprehensive income (no recycling). All commodity contracts are bilateral contracts, or embedded derivatives in bilateral contracts, for which there are no active markets. Fair value of all items in this category, is therefore Financial liabilities calculated using valuation techniques with maximum use of market inputs and assumptions Trade payables are initially recognized at fair value. Subsequently they are measured at that reasonably reflect factors that market participants would consider in setting a price, relying amortized cost using the effective interest method. Short-term payables are normally not as little as possible on entity-specific inputs. Fair values of commodity contracts are especially discounted. However, short-term payables and other short-term debt are discounted if it has sensitive to changes in forward commodity prices. None of the derivatives in this category are material impact on fair value. Fair value of these liabilities are assumed to be equal to their designated in hedge relationships. carrying amounts.
Interest-bearing borrowings are initially recognized at fair value less direct transaction costs. Subsequently they are measured at amortized cost using the effective interest method. Fair 193 value on long-term interest-bearing debt and other long-term liabilities differs from the carrying Yara Integrated Report 2020 amounts since the USD debenture bonds are held with fixed interest rates and are not subject to Financial instruments at fair value hedge accounting. For these USD debenture bonds with fixed interest rates and for other long- Financial instruments at fair value (FV) refer to derivatives at FV through profit and loss (P&L), term liabilities, no active market is available and fair value is calculated based on the present equity instruments at FV through OCI (other comprehensive income) and financial liabilities at value of future principal and interest cash flows. Cash flows are estimated by using LIBOR with FV through P&L. They are valued according to different levels in the fair value hierarchy in IFRS. different maturities as a benchmark and adding a credit margin derived from recent transactions The different levels are defined as follows: 01 THIS IS YARA or other information available. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. 02 YEAR IN REVIEW See note 4.5 for information on lease liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). 03 FROM THE BOARDROOM Contingent consideration is initially recognized at fair value and subsequently measured at fair Level 3: Inputs for the asset or liability that are not based on observable market data value through profit or loss. Fair value of contingent consideration is calculated considering the (unobservable inputs). 04 FINANCIAL STATEMENTS present value of expected payments, discounted using a risk-adjusted discount rate. The expect- ed payment is determined by considering the possible scenarios of financial performance, the Consolidated financial statements amount to be paid under each scenario and the probability of each scenario. Financial statements for Yara International ASA Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
194 Yara Integrated Report 2020 Carrying amounts and fair value per category
31 December 2020 Receivables Equity Non-financial Derivatives and deposits instruments Financial liabilities assets/liabilities
Fair value Designated for FV through OCI Amortized FV through 01 THIS IS YARA USD millions Notes through P&L hedging Amortized cost (no recycling) cost P&L Historic cost Total
02 YEAR IN REVIEW Non-current assets Other non-current assets 4.6 4 11 5 18 - - 342 380 03 FROM THE BOARDROOM Current assets Trade receivables 3.2 - - 1,478 - - - - 1,478 04 FINANCIAL STATEMENTS Prepaid expenses and other current assets 3.3 2 - 167 - - - 461 630 Consolidated financial statements Cash and cash equivalents 3.4 - - 1,363 - - - - 1,363 Financial statements for Sum financial assets 6 11 3,024 18 - - 792 3,851 Yara International ASA Non-current liabilities Statement from the Board and the CEO of Yara International ASA Other long-term liabilities (19) (9) - - (77) (14) (18) (138) Long-term interest-bearing debt 5.3 - - - - (3,371) - - (3,371) Auditor’s report Long-term lease liabilities 4.5 - - - - (335) - - (335) Reconciliation of alternative performance measures in Current liabilities the Yara Group Trade and other payables 5.5 (52) - - - (1,796) (33) 1 (1,880) Prepayments from customers ------(372) (372) Other short-term liabilities - - - - (8) - (87) (95) Short-term interest-bearing debt 5.3 - - - - (345) - - (345) Current portion of long-term debt 5.3 - - - - (132) - - (132) Short-term lease liabilities 4.5 - - - - (111) - - (111)
Sum financial liabilities (70) (9) - - (6,175) (48) (476) (6,779)
Total net balance (65) 2 3,024 18 (6,175) (48) 316 (2,927)
Fair value (65) 2 3,024 18 (6,502) (48)
Unrecognized gain/(loss) - - - - (327) -
Unrecognized loss on financial instruments at amortized cost is mainly related to long-term interest-bearing debt with fixed interest rate. See note 5.3 for details.
Equity instruments that are not traded in active markets are measured based on recent market transactions and valuation techniques. Equity instruments as of year end 2020 refer mainly to shares in Pohhjolan Voima Oyj. These investments are long-term and not held for trading. Dividend received in 2020 amounts to USD 1 million. 195 31 December 2019 Yara Integrated Report 2020 Receivables Equity Non-financial Derivatives and deposits instruments Financial liabilities assets/liabilities
Fair value Designated for FV through OCI Amortized FV through USD millions Notes through P&L hedging Amortized cost (no recycling) cost P&L Historic cost Total 01 THIS IS YARA Non-current assets Other non-current assets 4.6 - - 4 19 - - 391 414 02 YEAR IN REVIEW Current assets 03 FROM THE BOARDROOM Trade receivables 3.2 - - 1,564 - - - - 1,564 Prepaid expenses and other current assets 3.3 - - 176 - - - 377 553 04 FINANCIAL STATEMENTS Cash and cash equivalents 3.4 - - 300 - - - - 300
Consolidated financial statements Sum financial assets 1 - 2,043 19 - - 767 2,830 Financial statements for Non-current liabilities Yara International ASA Other long-term liabilities (77) (19) - - (116) (17) (18) (247) Statement from the Board and the Long-term interest-bearing debt 5.3 - - - - (2,698) - - (2,698) CEO of Yara International ASA Long-term lease liabilities 4.5 - - - - (337) - - (337) Auditor’s report Current liabilities Reconciliation of alternative Trade and other payables 5.5 (11) - - - (1,577) (26) - (1,614) performance measures in Prepayments from customers ------(399) (399) the Yara Group Other short-term liabilities - - - - (14) - (87) (101) Short-term interest-bearing debt 5.3 - - - - (494) - - (494) Current portion of long-term debt 5.3 - - - - (398) - - (398) Short-term lease liabilities 4.5 - - - - (98) - - (98)
Sum financial liabilities (88) (19) - - (5,732) (43) (505) (6,386)
Total net balance (87) (19) 2,043 19 (5,732) (43) 262 (3,556)
Fair value (87) (19) 2,043 19 (5,830) (43)
Unrecognized gain/(loss) - - - - (98) -
Unrecognized loss on financial instruments at amortized cost is mainly related to long-term interest-bearing debt with fixed interest rate. See note 5.3 for details.
196 Yara Integrated Report 2020 Financial instruments at fair value
31 December 2020 Reconciliation of fair value instruments at Level 3 from opening to closing balance
01 THIS IS YARA USD millions Level 1 Level 2 Level 3 Total USD millions 2020 2019
02 YEAR IN REVIEW Equity instruments - - 18 18 Balance at 1 January (40) (31) Derivatives, net - (54) (8) (62) Total gains or (losses): 03 FROM THE BOARDROOM Financial liabilities - (10) (38) (48) in income statement 13 16 in other comprehensive income (3) (2) 04 FINANCIAL STATEMENTS Net total balance - (64) (28) (92) Payments made - 1 Disposals/additions 1 (23) Consolidated financial statements There were no transfers between Level 1 and Level 2 in the period. Reclassification from level 3 to level 2 of the fair value hierarchy - - Financial statements for Foreign currency translation 2 (2) Yara International ASA 31 December 2019 Statement from the Board and the USD millions Level 1 Level 2 Level 3 Total Balance at 31 December (28) (40) CEO of Yara International ASA Auditor’s report Equity instruments - - 19 19 Reconciliation of alternative Derivatives, net - (84) (22) (106) performance measures in Financial liabilities - (6) (37) (43) the Yara Group Net total balance - (90) (40) (130)
There were no transfers between Level 1 and Level 2 in the period.
197 Yara Integrated Report 2020 Sensitivity of fair value measurement of financial instruments at Level 3 at 31 December 2020
Effect on P&L Effect on OCI
USD millions Favourable (Unfavourable) Favourable (Unfavourable) 01 THIS IS YARA Derivatives (20% decrease/(increase) in ammonia price) 5 (8) - - 02 YEAR IN REVIEW Equity instruments (20% increase/(decrease) in electricity price) - - 4 (4) Financial liabilities (20% decrease/(increase) in DAP price) 2 (3) - - 03 FROM THE BOARDROOM Total 7 (11) 4 (4) 04 FINANCIAL STATEMENTS
The favourable and unfavourable effects on derivatives refer to embedded derivatives in energy The favourable and unfavourable effects on financial liabilities refer to contingent consideration Consolidated financial statements contracts. The effects are calculated by decreasing/increasing the input of ammonia prices by 20% for regarding the binding agreement with the former non-controlling interest in GICS (former Financial statements for the whole contract period, also for long-term contracts. All other variables remain constant. Galvani). The effects are calculated by decreasing/increasing DAP price. All other variables Yara International ASA remain constant. In addition to these effects, there is a conditional future payment of maximum Statement from the Board and the The favourable and unfavourable effects on equity instruments refer to fair value of unlisted eq- USD 30 million related to future project success in GICS (see n o t e 7.2 for details). Fair value CEO of Yara International ASA uity securities. The effects are calculated based on a valuation model for estimation of fair value, of this future payment is included as contingent consideration, but it is not included in the sensi- increasing/decreasing the forward electricity prices used in the model by 20%. All other variables tivity analysis. Auditor’s report remain constant. Reconciliation of alternative performance measures in the Yara Group Gains and losses from financial instruments recognized in the consolidated statement of income and consolidated statement of other comprehensive income
Equity 2020 Derivatives instruments Financial liabilities
Fair value Designated FV through OCI Amortized Fair value USD millions Notes through P&L for hedging (no recycling) cost through P&L Total
Consolidated statement of income 6.1, 6.2 75 19 - - (6) 88 Consolidated statement of comprehensive income 1) 6.2 - 3 (3) 28 - 28
Total 75 22 (3) 28 (6) 115
1) Amounts are presented before tax. See note 2.8 for specification of taxes.
198 Yara Integrated Report 2020 Equity 2019 Derivatives instruments Financial liabilities
Fair value Designated for FV through OCI Amortized Fair value USD millions Notes through P&L hedging 2) (no recycling) cost through P&L Total 01 THIS IS YARA
Consolidated statement of income 64 - - - 2 66 02 YEAR IN REVIEW Consolidated statement of comprehensive income 1) - (16) (2) (12) - (30)
03 FROM THE BOARDROOM Total 64 (16) (2) (12) 2 36
04 FINANCIAL STATEMENTS 1) Amounts are presented before tax. See note 2.8 for specification of taxes. 2) 2019 figures are changed from what was presented in 2019 Annual report, now including currency effects on cross-currency swap closed in 2019 (which was incorrectly excluded in the 2019 report). Consolidated financial statements Financial statements for Yara International ASA Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
199 Yara Integrated Report 2020 7 Business initiatives
7.1 Disposal of investments 7. 2 Minority buy-out 01 THIS IS YARA Disposal 2020 Minority buy-out 2019 In 2020, Yara completed the sale of its 25% stake in Qatar Fertiliser Company (QAFCO) and re- In 2019, Yara closed the agreement with the non-controlling interest in GICS (GICS Indústria, 02 YEAR IN REVIEW ceived the consideration of USD 1 billion. The transaction led to a gain of USD 97 million, which Comércio e Serviços S.A., former Galvani) to acquire their 40% equity interest. is recognized as Other income in the Statement of Income and reflected in the Global Plants and 03 FROM THE BOARDROOM Operational Excellence segment. In addition to fair value of assets and liabilities transferred, consideration includes a cash pay- ment of USD 70 million over a three year period from closing and a conditional future payment 04 FINANCIAL STATEMENTS QAFCO is included in Yara’s statements with the following amounts: related to project success of maximum USD 30 million. In addition, Yara provided through GICS a capital contribution to the new entity of USD 30 million as starting capital minus adjustments
Consolidated financial statements USD millions 2020 2019 for a normalized level of working capital.
Financial statements for The carrying amount of the non-controlling interest in GICS at the date of closing (10 July 2019) Yara International ASA Statement of income was USD 139 million. The difference between the carrying amount and the consideration was Other income 97 - Statement from the Board and the recognized as a reduction to equity attributable to shareholders of the parent of USD 151 million. CEO of Yara International ASA Share of net income in equity-accounted investees 8 55 Auditor’s report Equity transactions with the non-controlling interest in GICS (former Galvani) in 2019: Statement of other comprehensive income Reconciliation of alternative Exchange differences on translation of foreign operations (6) - performance measures in USD millions GICS Remeasurements of the net defined benefit pension liability the Yara Group (1) - for equity-accounted investees Carrying amount of non-controlling interests acquired/(divested) 139 Consideration (290) Statement of changes in equity Increase/(decrease) in equity attributable to owners to the group (151) Translation of foreign operations (cumulative closing balance) - 6
Presented in the statement of changes in equity: Statement of financial position Increase/(decrease) to other reserves (54) Equity-accounted investees - 873 Increase/(decrease) to retained earnings (97) Non-current assets held-for-sale - - Total (151)
Statement of cash flows Dividend from equity-accounted investees - 158 Proceeds from sale of shares in equity-accounted investees 1,000 -
200 Yara Integrated Report 2020 8 Other disclosures
8.1 Related parties Board of Directors compensation 2020 and number of shares owned 31 December 2020 01 THIS IS YARA The Norwegian State Compensation At 31 December 2020, the Norwegian State owned 97,094,621 shares, representing 36.21% USD thousands, except number of shares earned in 2020 Number of shares 02 YEAR IN REVIEW of the total number of shares issued. On the same date, the National Insurance Fund, Norway owned 18,990,573 shares, representing 7.08% of the total number of shares issued. Trond Berger, Chairperson (from 7 May 2020) 1) 73 3,000 03 FROM THE BOARDROOM Kimberly Lein-Mathiesen 40 500 Yara Pension fund John Gabriel Thuestad 4) 56 1,200 04 FINANCIAL STATEMENTS One of Yara International ASA’s pension plans is arranged through Yara Pension Fund. This plan Håkon Reistad Fure 2) 4) 44 22,500 has been closed for new members since July 2006. During 2020, Yara has contributed to the 2) Consolidated financial statements pension fund through deductions from premium fund and premium paid by Yara International Adele Bugge Norman Pran 53 2,010 ASA. Birgitte Ringstad Vartdal (from 7 May 2020) 1) 29 2,500 Financial statements for 2) 3) Yara International ASA Rune Asle Bratteberg 48 367 Equity-accounted investees Geir O. Sundbø 1) 3) 44 339 Statement from the Board and the Transactions with equity-accounted investees are described in note 4.3. 3) CEO of Yara International ASA Ragnhild Flesland Høimyr (from 7 May 2020) 24 126 Øystein Jerkø Kostøl (from 7 May 2020) 3) 24 208 Auditor’s report Board of Directors Members of the Board of Directors are elected for two year terms. Their rights and obligations Geir Isaksen, Chairperson (till 7 May 2020) 26 n/a Reconciliation of alternative as board members are solely and specifically provided for the company’s articles of association Hilde Bakken (till 7 May 2020) 14 n/a performance measures in and Norwegian law. The company has no significant contracts in which a Board Member has a the Yara Group Eva Safrine Aspvik (till 7 May 2020) 13 n/a material interest. Kari Marie Nøstberg (till 7 May 2020) 13 n/a
Executive Management 1) Member of the HR Committee in 2020. Executive Management remuneration is disclosed in note 8.2. 2) Member of the Audit Committee in 2020. 3) Interest-free loan of USD 1.254 given through a trust in accordance with a Yara share purchase offer. 4) John Gabriel Thuestad and Håkon Reistad Fure receive an additional remuneration for Board members resident outside Scandinavia, currently NOK 30.000 per meeting.
Compensation of Board of Directors was USD 501 thousand in 2020 compared to USD 509 thousand in 2019.
The Chairperson and the members of the Board have no agreements for further compensation due to termination or changes in the position.
201 Yara Integrated Report 2020 Compensation 2020 and number of shares owned by the deputy Board Members at 31 December 2020
Compensation earned in 2020 Number of shares 01 THIS IS YARA
Inge Stabæk 1) - 524 02 YEAR IN REVIEW Vidar Viskjer 1) - 367 Morten Ødegård 1) - 1,046 03 FROM THE BOARDROOM Maiken Sandland - 85 04 FINANCIAL STATEMENTS Eva Safrine Aspvik 1) - 572 Terje Borlaug 1) - 63 Consolidated financial statements Kari Marie Nøstberg 1) - 488 Financial statements for Lise Gunvor Bækkevold Winther 1) - 225 Yara International ASA 1) Interest-free loan of USD 1.254 given through a trust in accordance with a Yara share purchase offer. Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
202 Yara Integrated Report 2020 8.2 Executive Management remuneration
Yara Executive Management: Compensation and number of shares owned at 31 December 2020 Accrued holiday 01 THIS IS YARA Short-term pay on short- Share Based Other Pension incentive term incentive Number of USD thousands, except number of shares Salary 2) Remuneration 1) benefits benefits accrued 3) accrued shares 02 YEAR IN REVIEW Svein Tore Holsether 4) 6) 720 216 35 192 321 39 40,373 03 FROM THE BOARDROOM Lars Røsæg 4) 6) 360 91 23 15 161 19 6,254 Tove Andersen 4) 6) 378 93 24 20 166 20 12,723 04 FINANCIAL STATEMENTS Terje Knutsen 4) 6) 355 87 34 122 155 19 12,807
4) 6) Consolidated financial statements Kristine Ryssdal 350 88 41 15 153 22 9,332 Pablo Barrera Lopez 4) 6) 350 90 26 15 156 19 7,061 Financial statements for 5) 8) 9) Yara International ASA Chrystel Monthean (from 1 June, 2020) 193 81 - 39 98 - 1,899 Pål Hestad (from 1 June, 2020) 4) 5) 187 80 21 9 83 10 5,634 Statement from the Board and the 5) CEO of Yara International ASA Fernanda Lopes Larsen (from 1 October, 2020) 80 - 8 4 36 4 1,955 Lair Hanzen (till 1 October, 2020) 5) 7) 272 115 28 38 153 - n/a Auditor’s report Lene Trollnes (till 31 May, 2020) 5) 10) 172 - 10 6 - - n/a Reconciliation of alternative performance measures in 1) Fixed cash amount as part of Share Based Remuneration (see description on page 206). the Yara Group 2) For Yara Executive Management no salary increase was applied. The development in base salary and actual paid salary may differ from one year to the next due to effects of the Norwegian holiday pay system, where a change in number of days holiday taken and/or annual holiday allowance impact salary paid. 3) Accrude short-term incentive payout (excluding holiday allowance) earned in 2020 to be paid in 2021. 4) Interest-free loan of USD 1,254 given through Yara International ASA in accordance with a Yara share purchase offer. 5) The numbers presented are for the period as member of Yara Executive Management in 2020. 6) Salary in NOK translation rate to USD: 0.1066 7) Salary in BRL translation rate to USD: 0.1960 8) Salary in EUR translation rate to USD: 1.1416 9) Benefits and perks are provided in relation to an international Assignment contract. The net value represents USD 155.250 - gross-up with average tax rate of 37.97% of the host location amounts the gross value USD 250.300. 10) In addition to the compensation mentioned in the table above, Lene Trollnes received a short-term Incentive payout of USD 53 097 for the period in which she was a member of the Group Executive Board. She also received termination compensation of USD 62,410, which was a net amount after deduction of income she had received from another employer during the period for which the severance pay applied.
203 Yara Integrated Report 2020 Yara Executive Management: Compensation and number of shares owned at 31 December 2019 Accrued holiday Short-term pay on short- Share Based Other Pension incentive term incentive Number of USD thousands, except number of shares Salary 2) Remuneration 1) benefits benefits accrued 3) accrued shares 01 THIS IS YARA Svein Tore Holsether 4) 6) 768 231 30 224 353 42 34,613
4) 6) 02 YEAR IN REVIEW Tove Andersen 401 100 26 27 133 16 7,862 Terje Knutsen 4) 6) 376 93 53 178 130 16 9,531 03 FROM THE BOARDROOM Lair Hanzen 7) 521 148 1 57 334 - 16,081 Kristine Ryssdal 4) 6) 349 69 31 15 110 13 5,795 04 FINANCIAL STATEMENTS Lene Trollnes 4) 6) 389 97 29 15 138 17 12,861 Pablo Barrera Lopez 4) 6) 345 94 33 16 147 18 3,337 Consolidated financial statements Lars Røsæg 4) 6) 372 97 24 15 151 18 3,442 Financial statements for Yves Bonte (till June 30, 2019) 5) 8) 367 - 2 43 142 - n/a Yara International ASA Terje Morten Tollefsen (till August 22, 2019) 4) 5) 6) 229 - 15 35 59 7 n/a Statement from the Board and the CEO of Yara International ASA 1) Fixed cash amount as part of Shared Based Remuneration (see description on page 206). 2) For Yara Executive Management employed in Norway, no salary increase was applied. For Yara Executive Management member employed in Belgium, an inflation increase of 2% was applied, no salary increase was applied. For Yara Executive Management member employed in Brazil, a salary Auditor’s report increase of 0.02% in line with the minimum increase under Brazil collective agreement was applied. The development in base salary and actual paid salary may differ from one year to the next due to effects of the Norwegian holiday pay system, where a change in number of days holiday taken and/or annual holiday allowance impact salary paid. Reconciliation of alternative 3) Accrude short-term incentive payout (excluding holiday allowance) earned in 2019 to be paid in 2020. performance measures in 4) Interest-free loan of USD 1,346 given through Yara International ASA in accordance with a Yara share purchase offer. the Yara Group 5) The numbers presented are for the period as member of Yara Executive Management in 2019. 6) Salary in NOK translation rate to USD: 0,1140. 7) Salary in BRL translation rate to USD: 0.2536. 8) Salary in EUR translation rate to USD: 1.1302.
Salary freeze and no cash bonus paid to Group Executive Board for 2020 Although Yara’s performance and outlook remains strong, the acceleration of the pandemic during In 2020, Yara delivered strong results with an improvement in free cash flow of USD 1.4 billion, recent weeks with the spread of new strains of the virus creates uncertainty for other industries, an increase in ROIC to 8%, committed or distributed returns to shareholders of NOK 52/share and countries and individuals worldwide. Given this broader context and Yara’s role in society and de- a successful reorganization of the company into a regional model with strengthened accountabil- spite the company’s strong position and outlook, the Group Executive Board has asked to abstain ity and closeness to customer. Furthermore, Yara’s industry fundamentals are robust, as the twin from the annual salary adjustment in June 2021 for the third consecutive year. Furthermore, in challenges of resource efficiency and environmental footprint require significant transformations line with Yara’s remuneration guidelines, the strong performance in 2020 qualified the Group Ex- within both agriculture and the hydrogen economy. Yara’s leading food solutions and ammonia po- ecutive Board to a cash Short-Term Incentive Payout payable in April 2021. The Group Executive sitions are well placed to both address and create business opportunities from these challenges. Board has however for the same reasons cited above asked for this payment to be frozen and for payment to be evaluated once visibility in society improves following the recent surge in Covid-19 cases. Pending the outcome of the evaluation, the Short-Term Incentive for 2020 will in any case not be paid in cash, but invested by the individual members of the Group Executive Board into Yara shares, to further align incentives through reinvestment in the company.
204 Yara Integrated Report 2020 CEO Remuneration 2020 in Norway. Since 2006 Yara in Norway has transitioned from Defined Benefit Pension Plans to Svein Tore Holsether‘s remuneration consist of the following elements: DC pension plan and simplified the pension plans. This work was completed in 2015 and new hires are now enrolled in one DC pension plan covering salary up to 12 times Norwegian Social Annual Base Salary Security Base Amount (G). When former pension plans were closed, existing members have been offered transitional or compensation arrangements. 01 THIS IS YARA The Annual Base Salary is USD 720,466 (NOK 6,758,400). No adjustment of his base salary was made during 2020 and it has remained unchanged since June 2018. 2021 Guidelines for remuneration of Group Executive Board and Board Members in Yara 02 YEAR IN REVIEW Short-Term Incentive Plan Yara’s guidelines for remuneration of Group Executive Board and Board members is prepared in The CEO is eligible for Short-Term Incentive payout according to the plan described below. accordance with the Public Limited Companies Act section 6-16a. Pursuant to the Public Limited 03 FROM THE BOARDROOM The Target payout is 40% with a capped payout of 50% of Annual Base Salary. Companies Act section 6-16a (5) the statement will be presented to the Annual General Meet- ing (AGM) 2021 for approval. The Ministry of Trade, Industry and Fisheries disclosed amended 04 FINANCIAL STATEMENTS Share Based Remuneration guidelines for remuneration of executives in state-owned and partly state-owned companies The CEO is entitled to Share Based Remuneration of 30% of Annual Base Salary according to the with effect from 13 February 2015 (State guidelines). Yara’s remuneration principles applying to Consolidated financial statements plan described below. Yara CEO and the other members of the Group Executive Board comply with these guidelines. Financial statements for Potential deviations will be reported in the report on remuneration of Group Executive Board and Yara International ASA Pension Plans and Personal Insurance Plans Board Members to the Annual General Meeting. The first report on remuneration will be reported Svein Tore Holsether is member of the following pension plans: at the Annual General Meeting 2022.For members of the Group Executive Board employed by Statement from the Board and the Yara companies in other countries remuneration may deviate from the State guidelines depending CEO of Yara International ASA A funded Defined Contribution (DC) plan providing contribution equal to 7% of part of pensionable on local market conditions. There is currently one member of Yara’s Group Executive Board who is Auditor’s report salary up to 7.1 times Norwegian Social Security Base Amount (G) plus 18% of salary between employed by a non-Norwegian Yara company. Reconciliation of alternative 7.1G and 12G; performance measures in An unfunded DC plan for salaries above 12G with contribution equal to 25% of pensionable salary Guidelines for remuneration of Board Members the Yara Group exceeding 12G The Chair and other Board members receive remuneration as Board members and members of Board Committees. The remuneration is determined by the General Meeting on the basis of Provided that he is employed by Yara at age 65 he will be entitled to an Age Limit Compensation. recommendation from the Nomination Committee. Employee-elected Board members receive This provides a benefit equal to 65% of his Annual Base Salary at that time until age 67. In case the same remuneration as shareholder-elected Board members. None of the shareholder elected he would be entitled to Severance Pay or if it is mutually agreed between him and the Yara Board Board members are employed by the Company. of Directors to continue the employment beyond age 65 he will not be entitled to the Age Limit Compensation. None of the employee-elected Board members are executives. The employee-elected Board members receive salary, pension and other remuneration such as bonuses, share-based remuner- The CEO is member of the personal insurance schemes applicable to Yara employees in Norway. ation, car allowance, etc. in accordance with the Company’s general terms for employment.
Other compensation elements The Chair and other members of the Board have no agreements for compensation in the event of The CEO is granted benefits in kind according to the applicable market standard, the main ele- termination or changes in their positions as Board members. ment being a fixed car allowance of USD 19,295 (NOK 181,000) annually. Guidelines for remuneration of Group Executive Board Comments to remuneration of other members of Group Executive Management in 2020 The Board of Directors determines the remuneration of the President and CEO (CEO) and ap- Chrystel Monthean is member of Yara IEC AG Pension Plan for Global Assignees. This is a DC proves the general terms of the company’s incentive plans for the Group Executive Board based pension plan with employer contributions equal to 20% of Base Salary. on proposals from the HR Committee The CEO determines the remuneration to the other mem- bers of the Group Executive Board. Other members of Yara Group Executive Management are included in Yara’s plans for employees 205 Yara Integrated Report 2020 Deviation from the guidelines Share Based Remuneration (SBR) The Board of Directors may decide to deviate entirely or partly from the guidelines temporarily in To support the alignment between executives and shareholder interests and to ensure retention individual cases provided that it has been regarded to be exceptional circumstances that make it of key talent in the company, an amount equal to 30% of the base salary for the CEO and 25% necessary to deviate from the guidelines in order to safeguard the company’s long - term interest, of the base salary for the other members of the Group Executive Board may be awarded by the financial sustainability or ensure the company’s viability. Potential deviations and the reason for Board on an annual basis. The net after tax amount must be invested in Yara shares within a 01 THIS IS YARA this will be reported in the report on remuneration of Group Executive Board and Board Members period of one month after the grant and the shares must be retained for minimum 3 years. Ex- to the Annual General Meeting. ecutives who resign from Yara must reimburse to the company at the time of resignation the net 02 YEAR IN REVIEW proceeds of the selling of the shares that are still within the lock-in period. General principles 03 FROM THE BOARDROOM The Board determines the total remuneration to the CEO and other members of the Group Execu- The grant of SBR is conditional on Yara’s Net Result excluding special items and currency gain/ tive Board on the basis of; loss being positive over the last three years. Yara’s CEO can on a discretionary basis decide that 04 FINANCIAL STATEMENTS • A commitment to exercise moderation through responsible and not market leading remuneration; SBR shall not be granted for a given year and Yara’s Board of Directors can decide that SBR shall • Incentivize management in line with maximizing long-term sustainable value creation to Yara’s not be granted to the CEO for a given year. Such an assessment will amongst other factors be Consolidated financial statements shareholders and other stakeholders evaluated against Yara’s performance towards its strategic targets of sustainable value creation, Financial statements for • The need to offer competitive terms to secure the company’s competitiveness in the labor hereunder Performance Indicators linked to People, Planet and Prosperity. Yara International ASA market In cases where members of the Group Executive Board are recruited in other countries than Nor- Statement from the Board and the Total remuneration for each member of the Group Executive Board, including all compensation way the SBR percentage may deviate from what is mentioned above depending on local market CEO of Yara International ASA elements, value of pension plan benefits and other benefits is compared to the relevant market conditions for remuneration. Auditor’s report on a regular basis. Pension plans for the Group Executive Board are moderate and in accordance with the State Guidelines for all members of the Group Executive Board that have joined after 3 In order to support alignment between members of the Group Executive Board and the sharehold- Reconciliation of alternative performance measures in December 2015 as further described below in the section Company paid Pension Plans. er interests it is furthermore expected that members of the Group Executive Board that partic- the Yara Group ipate in the SBR program, every year as a minimum - in addition to the shares received as part The total remuneration for the members of the Group Executive Board comprises the following of the SBR - invest in Yara shares an amount equaling the lowest amount received as net, after elements, that will be explained in detail; tax Short-Term Incentive payout for the preceding year or the net amount received as SBR for the • Base salary; relevant year. Such investments should be made until the shareholding amounts to two times the • Share Based Remuneration gross remuneration package, including pensions. Furthermore, it is also expected that members • Short-Term incentive plan of the Group Executive Board do not sell any Yara shares as long as they are members of the • Pension plan benefits Group Executive Board. • Other compensation elements such as internet connection and company car Short-term Incentive plan Base salary To secure that the Short-Term Incentive Plan contributes to realizing Yara’s strategy, its long- Base Salary is reviewed once a year as per 1st June as part of the Annual Salary Review for all term value creation and capital allocation policy, the Short-Term Incentive Plan is based on Yara’s employees in Yara. In addition, salaries may be reviewed if scope of responsibility is materially strategic targets as presented at Yara’s ESG Investor Seminar 7 December 2020, covering the changed. The development of basic salary for Executive Management is based on the following: dimensions of People, Planet and Prosperity. • Annual salary adjustment for employees in Yara International ASA and Norwegian subsidiaries; • Benchmark of Executive Management Salaries in peer companies The Short-Term Incentive Plan can have an outcome for the individual executive of 0% to 50% of base salary and is calculated as presented in the following paragraphs. Yara CEO and the other members of the Group Executive Board voluntarily abstained from the annual salary adjustment in both 2019 and 2020. The Group Executive Board will for the third Company performance year running abstain from the annual salary adjustment as per 1st June 2021. (From 0% to 30% of Base Salary) in line with the strategic targets released at Yara’s ESG Investor 206 Seminar 7 December 2020 (goals included below) Yara Integrated Report 2020 Company performance Progress on strategic focus areas The table below shows the relation between Yara’s long-term strategic targets and the Perfor- (From 0% to 20% of Base Salary) in line with the strategic targets released at Yara’s ESG Investor mance Indicators set to drive performance for 2021. Seminar 7 December 2020 (goals included below) Method of measurement for Company Performance: 01 THIS IS YARA If all stretched goals have been met and the planned actions have been taken during the year and The assessment of the performance score is based on a scale for each Indicator, where each with the desired result, this will give a Short-Term Incentive pay-out of 40% of the annual Base Indicator may result in an outcome between 0% of base salary, a target of 24% of base salary for 02 YEAR IN REVIEW Salary for Yara CEO and 35% for the other members of the Group Executive Board. The total pay- the CEO and 21% for the other members of the Group Executive Board, and a maximum of 30% out cannot exceed 50% of the annual Base Salary. of base salary. The weighted sum of the outcome of the factors represents the overall outcome 03 FROM THE BOARDROOM as a percentage of base salary. In cases where members of the Group Executive Board are recruited in other countries than 04 FINANCIAL STATEMENTS Norway the percentages may deviate from what is mentioned above depending on local market For commercial, competitive and general business reasons, the concrete target values of each conditions for remuneration. individual Indicator are not disclosed as part of this statement. Consolidated financial statements Financial statements for Yara International ASA Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
207 Yara Integrated Report 2020 Ambition for 2025 Performance indicators 2021
People People (25% of total company performance) 01 THIS IS YARA • No fatalities and TRI<1.0 • TRI rate development • Top quartile engagement index score • Process safety (PSI) 02 YEAR IN REVIEW • Top quartile Diversity & Inclusion Index score • Engagement index • >35% female leaders in senior management positions • Diversity & Inclusion Index 03 FROM THE BOARDROOM • Share of female senior leaders 04 FINANCIAL STATEMENTS • Female/male external recruitment senior personnel
Consolidated financial statements Planet Planet (25% of total company performance) Financial statements for • 150 million hectares under management • Active hectares under management • Greenhouse gas emissions intensity Yara International ASA • 10% lower GHG emissions in kg CO e/kg N produced 2 • Energy efficiency Statement from the Board and the • Launching carbon marketplace CEO of Yara International ASA • 30% absolute reduction in Scope 1 and 2 by 2030 Auditor’s report Reconciliation of alternative Prosperity Prosperity and capital discipline (50% of total company performance) performance measures in the Yara Group • 300-600 MUSD incremental EBITDA from new business models • Ammonia production volume - USD 1.5 billion revenues from new business models • Finished fertilizer production volume - USD 1.2 billion revenues from online sales • Premium generated • Delivering on YIP 2.0 by 2023: • Revenues from new business models • Revenues from online sales - Increased production: 1.3 mt ammonia and 2.8 mt finished products • EBITDA - Fixed cost flat at 2.34 BUSD, working capital reduced to 92 days • Fixed costs • ROIC > 10% mid cycle • Working capital days • Premium products: volume and commercial margin growth • ROIC • Capital expenditure • Progress projects on planned time/cost • MSCI rating • Net debt / EBITDA
208 Yara Integrated Report 2020 Strategic focus areas For employees on Norwegian employment contracts, the upper retirement age is 70 years with The following list of factors are set to drive performance for 2021: the possibility for flexible retirement from age 62 in the company paid DC plans. Yara has a • Scale the Farming Solutions organization defined benefit early retirement plan for executives on Norwegian employment contracts covering • Strategically develop Yara Clean Ammonia the period from age 65 to 67 with a defined benefit equal to 65% of final salary limited to 12G. • Improve plant reliability toolbox From 1st January 2015, the plan was closed for new members and ceased for employees below 01 THIS IS YARA • Strengthen change management and dynamic upskilling age 50. A DC pension plan was established to compensate members for the shortfall. Executives who were previously members of other Defined Benefit Pension Plans being terminated or con- 02 YEAR IN REVIEW Method of measurement for Strategic Focus Areas: verted to DC plans might have cash allowances to compensate for the shortfall. The assessment of the performance score is based on a scale for each factor, where each factor 03 FROM THE BOARDROOM may result in an outcome between 0% of base salary, a target of 16% of base salary for the CEO Executives employed by Yara companies in other countries will be covered by company paid pen- and 14% for the other members of the Group Executive Board, and a maximum of 20% of base sion plans according to national plans and markets. 04 FINANCIAL STATEMENTS salary. The weighted sum of the outcome of the factors represent the overall outcome as a per- centage of base salary. Personal insurance schemes Consolidated financial statements The executives are members of the personal insurance schemes applicable to other Yara employ- Financial statements for For commercial, competitive and general business reasons, the concrete target values and weight ees. These are Group Life Insurance, Disability Pension, lump-sum payment in the event of dis- Yara International ASA of each individual factor are not disclosed as part of this statement. ability, occupational diseases, occupational and non-occupational accident and Health Insurance. In addition, they are provided with a Travel Insurance covering both the executive and family. Statement from the Board and the In the Board’s total short-term incentive plan performance evaluation, in addition to the perfor- CEO of Yara International ASA mance towards the factors described above, the Board will put weight on how difficult it has been Other compensation elements Auditor’s report to achieve the results, changes in external non-controllable factors that were not anticipated Executives are granted benefits in kind according to the applicable market standard. These are at the beginning of the year and that the results have been achieved in accordance with Yara’s typically cell phone, internet connection and company car, alternatively fixed car allowance. Reconciliation of alternative performance measures in values and ethical principles. the Yara Group In the event of an international assignment contract, the executive and family will Claw back of share based remuneration and short-term Incentive payments be entitled to allowances and benefits in accordance with Yara’s Global Mobility Policy. Shares provided by the SBR and payments that have already been made from the Short- Term In- centive Plan are subject to claw back provisions covering both situations of misconduct and errors Members of Group Executive Board on Norwegian contracts are entitled to a severance pay equal leading to financial re-statement. Enforcement of the provision will be subject to local law. to six months basic salary on certain conditions. The severance pay is calculated from the end of the notice period. Other income the executive receives during the severance pay period will be deducted Benefit plans from the severance pay. For members of the Group Executive Board employed by Yara companies in other countries severance pay may deviate from the above depending on local regulations. Company paid pension plans Pension Plans in Yara should be defined contribution (“DC”) plans. Executive Management on Voluntary share purchase program Norwegian employment contracts are eligible to the company paid DC Pension Plan applicable Group Executive Board members employed in Norway can take part in the annual offer to all for all Yara employees in Norway. The contribution rates to this plan is 7% of part of pensionable permanent Yara employees in Norway where they can buy Yara shares with a tax-exempt dis- salary up to 7.1 times Norwegian Social Security Base Amount (G) and 18% of pensionable salary count being within a threshold set by the Norwegian authorities. Yara offers the employees an between 7.1G and 12G. interest-free loan with repayment of one year for the purchase of the shares. This plan comes in addition to the SBR. Yara has a DC Pension Plan covering salary in excess of 12G applicable for employees on Norwegian employment contracts. From December 2015 this plan was closed for new members. For internal Ad-hoc compensation elements recruits to the Executive Management who are members of the plan at commencement, future contri- In extraordinary circumstances related to recruitment processes, sign-on bonus may be agreed. butions to the plan stops and they become deferred members of the plan. Current members of the Ex- Any such compensation will be reported in the report on remuneration of Group Executive Board 209 ecutive Management at 3 December 2015 remain active members of the plan with future contributions. and Board Members to the Annual General Meeting. Yara Integrated Report 2020 8.3 External audit remuneration
Deloitte AS (Deloitte) is Yara’s auditor. A few subsidiaries of Yara International ASA have appointed other audit firms. The following table shows total audit and other services delivered to the group by the appointed auditor. 01 THIS IS YARA Assurance Other non- USD thousands Audit fee services Tax services audit services Total 02 YEAR IN REVIEW 2020 03 FROM THE BOARDROOM Deloitte Norway 722 365 83 21 1,192 Deloitte abroad 3,193 32 464 29 3,718 04 FINANCIAL STATEMENTS Total Deloitte 3,916 397 547 50 4,910
Consolidated financial statements Others 331 5 13 157 506 Financial statements for Total 4,247 402 560 207 5,416 Yara International ASA Statement from the Board and the 2019 CEO of Yara International ASA Deloitte Norway 643 105 - 51 799 Auditor’s report Deloitte abroad 3,413 71 384 120 3,988 Reconciliation of alternative Total Deloitte 4,056 176 384 171 4,787 performance measures in the Yara Group Others 207 72 110 31 421 Total 4,262 249 494 202 5,208
210 Yara Integrated Report 2020 8.4 Composition of the group
The consolidated financial statement of Yara comprises 127 legal companies that are controlled by Yara. The material subsidiaries are disclosed in the table below, including the main parent(s). This list also includes major holding companies. 01 THIS IS YARA Ownership Ownership Registered office Main parent(s) 02 YEAR IN REVIEW Yara Argentina S.A. 100.0% Argentina Yara Iberian S.A.U. 03 FROM THE BOARDROOM Yara Australia Pty Ltd. 100.0% Australia Yara Technology B.V. Yara Nipro Pty Ltd. 100.0% Australia Yara Australia Pty Ltd. 04 FINANCIAL STATEMENTS Yara Pilbara Fertilisers Pty Ltd. 100.0% Australia Chemical Holdings Pty Ltd. Chemical Holdings Pty Ltd. 100.0% Australia Yara Australia Pty Ltd. Consolidated financial statements Yara Environmental Technologies GmbH 100.0% Austria Yara Investment GmbH Financial statements for Yara Belgium S.A./N.V. 100.0% Belgium Yara Nederland B.V. Yara International ASA Yara Tertre S.A. 100.0% Belgium Yara Belgium S.A./N.V. Statement from the Board and the Yara Brasil Fertilizantes S.A. 100.0% Brazil Yara South America Investments B.V. CEO of Yara International ASA Yara Belle Plaine Inc. 100.0% Canada Yara Canada Holding Inc. Auditor’s report Yara Canada Holding Inc. 100.0% Canada Fertilizer Holdings AS Reconciliation of alternative Yara Canada Inc. 100.0% Canada Fertilizer Holdings AS performance measures in Yara Trading (Shanghai) Co. Ltd. 100.0% China Yara Asia Pte Ltd. the Yara Group Yara Colombia S.A. 99.4% Colombia Yara International ASA (70.1%) and OFD Holding S. de R.L. (29.3%) Yara Costa Rica S. de RL. 87.6% Costa Rica Yara Iberian S.A.U. Yara Danmark A/S 100.0% Denmark Fertilizer Holdings AS Yara Agri Trade Misr. Ltd. 51.0% Egypt Yara Trade Misr. Yara Dallol B.V. 58.6% Ethiopia Yara Nederland B.V. Yara Phosphates Oy 100.0% Finland Yara Suomi Oy Yara Suomi Oy 100.0% Finland Yara Nederland B.V. Yara France SAS 100.0% France Yara Nederland B.V. Yara Besitz GmbH 100.0% Germany Yara GmbH & Co. KG Yara Brunsbüttel GmbH 100.0% Germany Yara GmbH & Co. KG Yara GmbH & Co. KG 100.0% Germany Yara Investments Germany SE Yara Investment GmbH 100.0% Germany Yara GmbH & Co. KG Yara Investments Germany SE 100.0% Germany Yara Nederland B.V.
Table continues > 211 Yara Integrated Report 2020 > Table continued
Ownership Ownership Registered office Main parent(s)
01 THIS IS YARA Yara Ghana Ltd. 100.0% Ghana Yara Nederland B.V. Yara Hellas S.A. 100.0% Greece Yara Nederland B.V. 02 YEAR IN REVIEW Yara Guatemala S.A. 100.0% Guatemala Yara International ASA 03 FROM THE BOARDROOM Yara Fertilisers India Pvt. Ltd. 100.0% India Yara Asia Pte Ltd P.T. Yara Indonesia 100.0% Indonesia Yara Asia Pte Ltd. 04 FINANCIAL STATEMENTS Yara Insurance DAC 100.0% Ireland Fertilizer Holdings AS Yara Italia S.p.A. 100.0% Italy Yara Investment GmbH (72.3%) and Yara Nederland B.V. (27.7%) Consolidated financial statements Yara Côte d'Ivoire S.A. 100.0% Ivory Coast Fertilizer Holdings AS Financial statements for Yara East Africa Ltd. 100.0% Kenya Yara Overseas Ltd. Yara International ASA Yara International (M) Sdn. Bhd. 70.0% Malaysia Yara Asia Pte Ltd. Statement from the Board and the Yara México S. de R.L. de C.V. 99.9% Mexico OFD Holding S. de R.L. (70.7%) and Yara Nederland B.V. (29.2%) CEO of Yara International ASA Yara Mozambique Lda. 100.0% Mozambique Yara Nederland B.V. Auditor’s report Fertilizer Holdings AS 100.0% Norway Yara International ASA Reconciliation of alternative Herøya Nett AS 100.0% Norway Yara Norge AS performance measures in Yara Marine Technologies AS 100.0% Norway Fertilizer Holdings AS the Yara Group OFD Holding S. de RL 100.0% Norway Fertilizer Holdings AS Yara AS 100.0% Norway Fertilizer Holdings AS Yara Birkeland AS 100.0% Norway Fertilizer Holdings AS Yara Norge AS 100.0% Norway Yara International ASA Yara LPG Shipping AS 100.0% Norway Fertilizer Holdings AS Yara Fertilizers Philippines Inc. 100.0% Philippines Yara Asia Pte Ltd. Yara Poland Sp.zo.o 100.0% Poland Yara Nederland B.V. Yara Asia Pte Ltd. 100.0% Singapore Yara International ASA Yara Animal Nutrition South Africa (Pty) Ltd. 100.0% South Africa Yara Phosphates Oy Yara Africa Fertilizers (Pty) Ltd. 100.0% South Africa Yara Nederland B.V. Yara Iberian S.A.U. 100.0% Spain Yara Nederland B.V. Yara Marine Technologies AB 100.0% Sweden Yara Marine Technologies AS
Table continues >
212 Yara Integrated Report 2020 > Table continued
Ownership Ownership Registered office Main parent(s)
Yara AB 100.0% Sweden Fertilizer Holdings AS 01 THIS IS YARA Yara Switzerland Ltd. 100.0% Switzerland Yara Nederland B.V.
02 YEAR IN REVIEW Yara Tanzania Ltd. 100.0% Tanzania Fertilizer Holdings AS Yara Thailand Ltd. 100.0% Thailand Yara Asia Pte Ltd. 03 FROM THE BOARDROOM Yara Holding Netherlands B.V. 100.0% The Netherlands Fertilizer Holdings AS Yara Nederland B.V. 100.0% The Netherlands Yara Holding Netherlands B.V. 04 FINANCIAL STATEMENTS Yara Sluiskil B.V. 100.0% The Netherlands Yara Nederland B.V. Yara South America Investments B.V. 100.0% The Netherlands Yara Nederland B.V. Consolidated financial statements Yara Technology B.V. 100.0% The Netherlands Yara Nederland B.V. Financial statements for Yara Vlaardingen B.V. 100.0% The Netherlands Yara Nederland B.V. Yara International ASA Yara Caribbean Ltd. 100.0% Trinidad and Tobago Fertilizer Holdings AS Statement from the Board and the Yara UK Ltd. 100.0% United Kingdom Fertilizer Holdings AS CEO of Yara International ASA Yara North America Inc. 100.0% United States Yara International ASA Auditor’s report Freeport Ammonia LLC 100.0% United States Yara North America Inc. Reconciliation of alternative Yara West Sacramento Terminal LLC 100.0% United States Yara North America Inc. performance measures in Yara Fertilizer Zambia Ltd. 100.0% Zambia Yara Nederland B.V. the Yara Group
8.5 Post balance sheet events
On 9 February 2021 Yara announced that a new global unit had been established – Yara Clean The partners will target green hydrogen and green ammonia opportunities within shipping, agri- Ammonia – to capture growth opportunities within carbon-free food solutions, shipping fuel and culture and industrial applications, by electrifying and decarbonizing Yara’s existing ammonia facil-
other clean ammonia applications, leveraging Yara’s unique existing positions within ammonia ity in Porsgrunn. Building on their combined expertise, the partners aim to fully remove CO2 emis- production, trade and shipping. This new global unit will be reported as an additional, separate sions from ammonia production, thereby producing emission-free fuel for shipping, carbon-free operating segment from 2021. fertilizer and ammonia for industrial applications.
On 18 February 2021 Yara announced that the company had signed a Letter of Intent with Yara’s Board will propose to the Annual General Meeting a dividend of NOK 20 per share for Statkraft, and Aker Horizons, aiming to establish Europe’s first large-scale green ammonia 2020. project in Norway, enable the hydrogen economy and accelerate the green energy transition.
213 Yara Integrated Report 2020 Financial statements for Yara International ASA
01 THIS IS YARA
02 YEAR IN REVIEW Yara International ASA Income statement 215 Yara International ASA Balance sheet 216 03 FROM THE BOARDROOM Yara International ASA Cash flow statement 218
04 FINANCIAL STATEMENTS Basis for preparation 219 Consolidated financial statements Notes to the financial statements 221 Financial statements for Yara International ASA 1 Employee benefits 221 Statement from the Board and the 2 Remunerations and other 225 CEO of Yara International ASA 3 Intangible assets, property, plant and equipment 226 4 Specification of items in the income statement 228 Auditor’s report 5 Financial income and expenses 229 Reconciliation of alternative 6 Income taxes 229 performance measures in 7 Shares in subsidiaries 231 the Yara Group 8 Specification of other balance sheet items 232 9 Guarantees 232 10 Financial risks and hedge accounting 232 11 Number of shares outstanding, shareholders, equity reconciliation etc. 235 12 Long-term debt 237 13 Transactions with related parties 239
Statement from the Board and the CEO of Yara International ASA 241
Auditor’s report 244
Reconciliation of alternative performance measures in the Yara Group 249
214 Yara Integrated Report 2020 Yara International ASA Income statement 01 THIS IS YARA
02 YEAR IN REVIEW NOK millions Notes 2020 2019
03 FROM THE BOARDROOM Revenues 4 2,322 2,107 04 FINANCIAL STATEMENTS Other income 1 1 Revenues and other income 2,322 2,108 Consolidated financial statements Financial statements for Raw materials, energy costs and freight expenses (21) (10) Yara International ASA Change in inventories of own production 6 (7) Statement from the Board and the Payroll and related costs 2 (1,063) (1,035) CEO of Yara International ASA Depreciation, amortization and impairment loss 3 (206) (171) Auditor’s report Other operating expenses 4 (2,264) (1,986) Reconciliation of alternative Operating costs and expenses (3,548) (3,209) performance measures in the Yara Group Operating income (1,226) (1,102)
Financial income (expense), net 5 17,146 (331) Income before tax 15,920 (1,432)
Income tax expense 6 (230) 294 Net income 15,690 (1,138)
Appropriation of net income and equity transfers Dividend proposed 5,202 4,054 Retained earnings 10,488 (5,192) Total appropriation 11 15,690 (1,138)
215 Yara Integrated Report 2020 Yara International ASA Balance sheet 01 THIS IS YARA
02 YEAR IN REVIEW NOK millions Notes 31 Dec 2020 31 Dec 2019 NOK millions Notes 31 Dec 2020 31 Dec 2019
03 FROM THE BOARDROOM ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY 04 FINANCIAL STATEMENTS Non-current assets Equity Deferred tax assets 6 920 1,141 Share capital reduced for treasury stock 442 459 Consolidated financial statements Intangible assets 3 605 697 Premium paid-in capital 117 117 Financial statements for Property, plant and equipment 3 79 83 Total paid-in capital 560 577 Yara International ASA Shares in subsidiaries 7 19,853 19,853 Statement from the Board and the Intercompany receivables 13 38,071 44,927 Retained earnings 18,960 14,981 CEO of Yara International ASA Other non-current assets 8 593 411 - Treasury shares (2,809) (1,037) Auditor’s report Total non-current assets 60,121 67,111 Shareholders' equity 11 16,711 14,521 Reconciliation of alternative performance measures in Current assets Non-current liabilities the Yara Group Inventories 8 23 12 Employee benefits 1 991 965 Trade receivables 9 9 Long-term interest-bearing debt 12 28,187 23,035 Intercompany receivables 13 12,733 9,202 Other long-term liabilities 190 705 Prepaid expenses and other current assets 10 404 829 Total non-current liabilities 29,367 24,705 Cash and cash equivalents 10,270 1,189 Total current assets 23,440 11,240
Total assets 83,561 78,351
216 Yara Integrated Report 2020
01 THIS IS YARA
02 YEAR IN REVIEW The Board of Directors of Yara International ASA NOK millions Notes 31 Dec 2020 31 Dec 2019 Oslo, 25 March 2021 03 FROM THE BOARDROOM Current liabilities 04 FINANCIAL STATEMENTS Trade and other payables 229 213 Bank loans and other interest-bearing short-term debt 8 1,518 2,519 Trond Berger Kimberly Lein-Mathisen Adele Bugge Norman Pran Consolidated financial statements Current portion of long-term debt 12 967 3,342 Chairperson Vice chair Board member Financial statements for Dividends payable 11 5,202 4,054 Yara International ASA Intercompany payables 13 28,789 28,615 Statement from the Board and the Current income tax 6 14 10 John Thuestad Rune Bratteberg Birgitte Ringstad Vartdal CEO of Yara International ASA Other current liabilities 763 370 Board member Board member Board member Auditor’s report Total current liabilities 37,483 39,124 Reconciliation of alternative performance measures in Total liabilities and shareholders' equity 83,561 78,351 the Yara Group Ragnhild Flesland Høimyr Geir O. Sundbø Håkon Reistad Fure Board member Board member Board member
Øystein Kostøl Svein Tore Holsether Board member President and CEO
217 Yara Integrated Report 2020 Yara International ASA Cash flow statement 01 THIS IS YARA
02 YEAR IN REVIEW NOK millions Notes 2020 2019 NOK millions Notes 2020 2019
03 FROM THE BOARDROOM Operating activities Investing activities 04 FINANCIAL STATEMENTS Operating Income (1,226) (1,102) Purchases of property, plant and equipment 3 (11) (20) Purchases of other long-term investments 3 (108) (204) Consolidated financial statements Adjustments to reconcile operating income to net cash Net cash from/(to) long-term intercompany loans 13 8,781 138 Financial statements for provided by operating activities Proceeds from sales of long-term investments - 1 Yara International ASA Net cash provided by/(used in) investing activities 8,662 (86) Statement from the Board and the Depreciation, amortization and impairment loss 3 206 171 CEO of Yara International ASA Tax received/(paid) 6 (16) (2) Financing activities
Auditor’s report Dividend received from subsidiary Loan proceeds 12 7,101 3,039 11 11,105 - and associated companies Reconciliation of alternative Principal payments (5,258) (6,198) performance measures in Group relief received 900 4,500 Purchase of treasury stock 11 (2,806) (586) the Yara Group Interest and bank charges received/(paid) (420) (751) Dividend paid 11 (8,811) (1,772) Other (8) (4) Net cash used in financing activities (9,775) (5,518)
Change in working capital Foreign currency effects on cash and cash equivalents (221) - Trade receivables 3 (4)
Short-term intercompany receivables/payables 13 (760) 4,037 Net increase/(decrease) in cash and cash equivalents 9,081 814 1) Prepaid expenses and other current assets 1,132 62 Cash and cash equivalents at 1 January 1,189 375 Trade payables 20 (13) Cash and cash equivalents at 31 December 10,270 1,189 Other current liabilities 1) (522) (477) 1) 2020 includes NOK 470 million net cash inflow due to currency forward contracts and prior periods’ collateral deposits with banks to keep Net cash provided by operating activities 10,414 6,417 credit exposure from derivatives within agreed limits.
218 Yara Integrated Report 2020 Basis for preparation
01 THIS IS YARA
General Revenue 02 YEAR IN REVIEW The financial statements for Yara International ASA have been prepared in accordance with the In all material respects, revenue stem from sale of intercompany services. These are recognized Norwegian Accounting Act and generally accepted accounting principles in Norway (NGAAP). when the services are delivered based on intragroup allocation of costs. 03 FROM THE BOARDROOM Preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as disclo- Interest income is recognized in the income statement as it is accrued, based on the effective 04 FINANCIAL STATEMENTS sures of contingencies. Actual results may differ from estimates. interest method.
Consolidated financial statements Yara International ASA primarily holds shares in subsidiaries and provides financing to entities in Receivables Financial statements for the Yara Group. Please be aware that the information in note 5.3 Interest-bearing debt to the con- Trade receivables and short-term intercompany receivables are recognized at nominal value, less Yara International ASA solidated financial statements also applies to Yara International ASA. Revenue mainly stem from an accrual for expected losses. The accrual for losses is based on an individual assessment of allocation of costs related to intragroup services provided. each receivable. Statement from the Board and the CEO of Yara International ASA The accompanying notes are an integral part of the financial statements. Cash and cash equivalents Auditor’s report Cash and cash equivalents include bank deposits and monetary items which are due in less than Shares in subsidiaries three months. Reconciliation of alternative Shares in subsidiaries are presented according to the cost method. Dividends and Group reliefs performance measures in are recognized in the income statement when these are proposed by the subsidiary. Group relief The cash held by Yara International ASA reflects that most external bank deposits are channeled the Yara Group received is included in dividends. Shares in subsidiaries are reviewed for impairment whenever through the group treasury function. Consequently, the level of cash held should be seen in con- events or changes in circumstances indicate that the carrying amount may exceed the fair value text with the intercompany receivables and payables. of the investment. Indications may be operating losses or adverse market conditions. Fair value of the investment is estimated based on valuation model techniques. If it is considered probable Payables that the fair value is below Yara’s carrying value, the investment is impaired. The impairment is Trade payables and short-term intercompany payables are recognized at nominal value. reversed if the impairment situation is no longer present. Financial assets and liabilities Foreign currency transactions Financial assets, other than derivatives, are initially recognized in the balance sheet at fair value The functional currency of Yara International ASA is Norwegian kroner (NOK). Transactions in (cost) and subsequently at the lower of cost or fair value. Financial liabilities are initially recog- currencies other than the functional currency are recognized by applying the exchange rate at nized in the balance sheet at fair value (cost) and subsequently at amortized cost. the date of transaction. Monetary items denominated in foreign currencies are translated using the exchange rate at the balance sheet date. Non-monetary items that are measured in terms of Cost of sales and other expenses historical cost in a foreign currency are not re-translated. Cost of sales and other expenses are recognized in the same period as the revenue to which they relate. If there is no clear connection between the expense and revenue, an estimated allocation All realized and unrealized currency gains and losses on transactions, assets and liabilities are is done. Other exceptions to this matching criteria are disclosed where appropriate. included in net income if they do not qualify for hedge accounting.
219 Yara Integrated Report 2020 Income taxes Other leases are accounted for as operating leases with lease payments recognized as an expense Income tax expense represents the sum of the tax currently payable and deferred tax. The tax over the lease term. currently payable is based on taxable profit for the year. Deferred income tax expense is calculat- ed using the liability method in accordance with the preliminary Norwegian Accounting Standard Forward currency contracts on Income Taxes (“NRS Resultatskatt”). Under this standard, deferred tax assets and liabilities Forward currency contracts are initially recognized in the balance sheet at fair value. Subsequent 01 THIS IS YARA are measured based on the differences between the carrying values of assets and liabilities for changes in fair value are recognized in the income statement. financial reporting and their tax basis, which is considered temporary in nature. Deferred income 02 YEAR IN REVIEW tax expense represents the change in deferred tax asset and liability balances during the year, ex- Interest rate and cross currency swaps cept for deferred tax related to items charged to equity. Changes resulting from amendments and Interest income and expense relating to swaps that are not designated as hedge instruments are 03 FROM THE BOARDROOM revisions in tax laws and tax rates are recognized when the new tax laws or rates are adopted. recognized as net income or expense over the life of the contract. Cross currency swaps are trans- lated into Norwegian kroner at the applicable exchange rate at the balance sheet date with the 04 FINANCIAL STATEMENTS Intangible assets resulting unrealized currency translation gain or loss recognized in “Financial income/(expense), Intangible assets acquired individually or as a group are initially recognized at fair value, and sub- net” in the income statement. Consolidated financial statements sequently amortized on a straight-line basis over their useful life. They are tested for impairment Financial statements for whenever indications of impairment are present. Shared-based remuneration Yara International ASA Yara has a shared-based remuneration program which provides a fixed cash amount to eligible Research costs are expensed as incurred. Costs incurred in development of internally generated top executives. Yara purchases the shares on behalf of the executives at market prices. The Statement from the Board and the intangible assets are capitalized if defined recognition criteria are met. If these recognition criteria executives holds all shareholder rights from the date of purchase but cannot sell the shares in the CEO of Yara International ASA are not met, development cost are expensed in the period they incur. three years vesting period. This program does not have dilutive effect since it represents ordinary Auditor’s report shares outstanding. Property, plant and equipment Reconciliation of alternative performance measures in Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is The fair value of the purchased shares is recognized as reduction in equity. The costs for the the Yara Group determined using the straight-line method over the assets’ useful life. Assets are reviewed for Shared Based Remuneration program is expensed in the year when the shares are granted. How- impairment whenever events or changes in circumstances indicate that the carrying amount may ever, the costs are re-invoiced within the same year to Yara units globally as part of the shared not be recoverable. cost model. The employee tax is calculated and expensed at the grant date.
Inventories The Company also gives employees the possibility to purchase shares in Yara at a reduced price. Inventories are valued at the lower of cost, using weighted average, and net realizable value. The The related cost is recognized when the employee exercises this option. cost of inventories comprise all costs incurred in bringing the inventories to their present location and condition, including direct materials, direct labor, and an appropriate portion of production Employee retirement plans overhead, or the purchase price of the inventory. Employee retirement plans are measured in accordance with IAS 19 Employee Benefits, as this is permitted by the Norwegian accounting standard on pensions (“NRS 6 Pensjonskostnader”). Past Leased assets service cost is recognized immediately in the Statement of income together with any gains and Assets which are leased on conditions which substantially transfer all the economic risks and losses arising from curtailments and settlements. Remeasurement gains and losses are recog- rewards to Yara (finance lease) are accounted for as property, plant and equipment at the present nized directly in retained earnings. value of minimum lease payments, or fair value if this is lower. The corresponding finance lease liabilities are initially included in long-term debt. Property, plant and equipment are depreciated over the estimated useful lives of the assets, or the lease term if shorter. The related liabilities are reduced by the amount of lease payments less the effective interest expense.
220 Yara Integrated Report 2020 1 Employee benefits Long-term employee benefit obligations recognized in the statement of financial position
Yara International ASA has incurred obligations under a funded defined benefit plan. The pension NOK millions 2020 2019 plan was closed to new entrants in 2006 and employees below the age of 55 received a paid-up policy for previously earned benefit entitlements. The defined benefit plan was replaced by a de- 01 THIS IS YARA Pension liabilities for defined benefit plans (981) (956) fined contribution plan from the same date, which requires Yara International ASA to make agreed Termination benefits and other long-term employee benefits (9) (9) 02 YEAR IN REVIEW contributions when employees have rendered service entitling them to the contributions. Yara International ASA has no legal or constructive obligation to pay further contributions. This new Surplus on funded defined benefit plan 417 348 plan applies to the future pension earnings of existing employees below the age of 55 in 2006 Net long-term employee benefit obligations (574) (617) 03 FROM THE BOARDROOM and all new employees. Pension liabilities for defined benefit plans also include certain unfunded obligations. 04 FINANCIAL STATEMENTS Expenses for long-term employee benefit obligations recognized in the statement of income Other long-term employee benefits include a provision for jubilee benefits. Consolidated financial statements NOK millions 2020 2019 Financial statements for Yara International ASA is obliged to and does fulfill the requirements of the act regarding manda- Yara International ASA tory occupational pension scheme (“Lov om obligatorisk tjenestepensjon”). Defined benefit plans (43) (42) Statement from the Board and the Defined contribution plans (57) (57) Defined benefit plans CEO of Yara International ASA Termination benefits and other long-term employee benefits (10) (11) The Company’s net obligation in respect of defined benefit plans is calculated separately for each Net expenses recognized in Statement of income (110) (110) Auditor’s report plan. The amount is an estimation of future benefits that the employees have earned in return Reconciliation of alternative for their service in current and prior periods. The benefit is discounted to determine its present value, and the fair value of plan assets is deducted. The discount rate is the yield at the balance performance measures in Defined benefit plans sheet date on high quality corporate bonds or government bonds where no market for high quality the Yara Group Yara International ASA is the sponsor of Yara Pensjonskasse, a funded pension plan which also corporate bonds exists. If the bond has a different maturity from the obligation, the discount rate covers employees of its subsidiary Yara Norge AS. Plan benefits are based on years of service and is adjusted. Qualified actuaries using the projected credit unit method perform the calculations. final salary levels. Determination of the required annual contribution to Yara Pensjonskasse from each of the participating legal entities is defined by the bylaws of the pension fund, and is based Past service costs arising from the amendment of plan benefits are recognized immediately in on actuarial calculations. The distribution of pension costs to the participating entities is based profit or loss. Remeasurement gains and losses are recognized as retained earnings through other on the same calculations. At 31 December 2020, the number of active participants in the funded comprehensive income in the period they occur, and will not be reclassified to profit or loss in defined benefit plan who were employed by Yara International ASA, was 0 and the number of subsequent periods. retirees was 128. In addition, 365 current and previous employees of Yara International ASA have earned paid-up policies in the pension fund. Defined contribution plans Obligations for contributions to defined contribution plans are recognized as an expense in the Yara International ASA participates in a multi-employer plan (AFP - “Avtalefestet pensjon”) which statement of income when employees have rendered services entitling them to the contributions. entitles most of its employees the right to retire from the age of 62. Participating entities are Prepaid contributions are recognized as an asset to the extent that a cash refund or deduction in required to pay an annual fee for each of its active employees. As the information required to future payments is available. account for this part of the plan as a defined benefit plan is not available from the plan adminis- trator, it is accounted for as if it were a defined contribution plan. The provision for defined benefit Other long-term benefits plans includes however the calculated obligation to pay a percentage of benefits paid to its em- The Company’s obligation in respect of other long-term benefits is the amount of future benefits ployees who have chosen early retirement under this plan. A further defined benefit obligation is that the employees have earned in return for their service in current and prior periods. The obliga- recognized to account for a gratuity offered by Yara International ASA to its employees who retire tion is discounted based on the same principles as defined benefit plans. 221 with the AFP scheme. Yara Integrated Report 2020 Norwegian employees at position level of department manager or above are members of an un- The following financial assumptions have been applied for the valuation of liabilities (in %): funded early retirement plan. The plan covers the period from age 65 to 67 with a defined benefit
equal to 65% of final salary. From 2006 accrual of pension in this plan has been limited to a In percentages 2020 2019 salary of 12G (i.e. 12 times the Norwegian Social Security Base Amount, which from 1 May 2020 was NOK 101,351). 01 THIS IS YARA Discount rate 1.7 2.1
Effective 1 January 2015 Yara International ASA implemented changes to the early retirement Expected rate of salary increases 2.1 2.2 02 YEAR IN REVIEW schemes, both the AFP gratuity plan and the plan for early retirement from 65 to 67 for positions Future rate of pension increases 0.5 1.0 as department manager or above, in which all employees below age 50 were transferred to new 03 FROM THE BOARDROOM contribution-based plans which offer increased contribution rates compared to the ordinary de- Actuarial valuations provided the following results: fined contribution plan, as well as compensation contributions, where applicable. Employees aged 04 FINANCIAL STATEMENTS 50 or above retained their rights from the old plans, however with the option to choose a transfer NOK millions 2020 2019 to the new contribution-based plans. As the compensation contribution plans are unfunded and Consolidated financial statements Yara International ASA retains investment risk, they are accounted for as defined benefit plans. Present value of unfunded obligations (860) (838) Financial statements for Yara International ASA Norwegian employees with salary above 12G as of 3 December 2015 are members of an un- Present value of wholly or partly funded obligations (744) (765) funded plan which requires Yara International ASA to contribute for active plan members with Total present value of obligations (1,604) (1,602) Statement from the Board and the an amount equal to 25% of pensionable salary in excess of 12G for each year of service, with the CEO of Yara International ASA Fair value of plan assets 1,161 1,113 addition of annual return on the accumulated balance. The plan was closed to new members from Social security on defined benefit obligations (121) (118) Auditor’s report 3 December 2015. As the plan is unfunded and investment risk is retained by Yara International Total recognized liability for defined benefit plans (564) (608) ASA, the plan is included in the obligation for defined benefit plans. Reconciliation of alternative performance measures in the Yara Group Valuation of defined benefit obligations Duration of liabilities at the end of the year: The defined benefit plans are valued at 31 December using updated financial and demographical assumptions and taking into account relevant economic environment factors. Duration of liabilities (in years) 2020
It is the opinion of the management of Yara International ASA that there is a sufficiently deep Funded plan 15.1 market for high quality corporate bonds in Norway, which is therefore used as reference for deter- Unfunded plans 11.0 mination of the discount rate. Normal assumptions for demographical and retirement factors have been used by the actuary when calculating the obligation. Estimated future mortality is based Pension cost recognized in Statement of income on published statistics and mortality tables. The actuary has used the K2013BE mortality table. The assumptions used to value the defined benefit obligations at 31 December are used in the fol- According to K2013BE a current employee aged 45 today would be expected to live 24.1 years lowing year to determine the net pension cost. The discount rate is used to calculate the interest after reaching the retirement age of 65, whereas an employee aged 65 today would on average income from plan assets. be expected to live 23.4 years.
222 Yara Integrated Report 2020 The following items have been recognized in the Statement of income: Development of defined benefit obligations
NOK millions 2020 2019 NOK millions 2020 2019
Current service cost (24) (23) 01 THIS IS YARA Defined benefit obligation as of 1 January (1,602) (1,489) Administration cost (2) (2) Current service cost (24) (23) 02 YEAR IN REVIEW Social security cost (6) (6) Interest cost (33) (39) Payroll and related costs (32) (31) Experience adjustments (32) (14) 03 FROM THE BOARDROOM Effect of changes in financial assumptions 22 (98) Interest on obligation (33) (39) 04 FINANCIAL STATEMENTS Benefits paid 65 61 Interest income from plan assets 21 28 Defined benefit obligation as of 31 December (1,604) (1,602) Consolidated financial statements Interest expense and other financial items (12) (11)
Financial statements for Development of plan assets Yara International ASA Total expense recognized in income statement (43) (42)
Statement from the Board and the NOK millions 2020 2019 Sensitivity of assumptions CEO of Yara International ASA Measurement of defined benefit obligations and pension costs requires the use of a number of Auditor’s report assumptions and estimates. Below table indicates the sensitivity of the most material financial Fair value of plan assets as of 1 January 1,113 1,065 assumptions applied to the defined benefit obligation, by showing the result from an increase or Reconciliation of alternative Interest income from plan assets 21 28 decrease in any one of the assumptions applied (all other assumptions held constant). performance measures in Administration cost (2) (2) the Yara Group Return on plan assets (excluding calculated interest income) 58 51
NOK millions 2020 2019 Employer contributions 2 - Benefits paid (32) (29)
Actual valuation (1,604) (1,602) Fair value of plan assets as of 31 December 1,161 1,113
Discount rate +0.5% (1,520) (1,514) Yara Pensjonskasse (the pension fund) is a separate legal entity, independently governed by its Discount rate -0.5% (1,695) (1,699) Board of Directors. It is the responsibility of the pension fund’s Board of Directors to determine the investment strategy, and to review the administration of plan assets and the funding level of Expected rate of salary increase +0.5% (1,616) (1,616) the pension fund. If needed, Yara International ASA will be required to increase the capital buffer Expected rate of salary increase -0.5% (1,592) (1,590) of the pension fund.
Expected rate of pension increase +0.5% (1,683) (1,686) Yara International ASA’s defined benefit plan obligations are inherently exposed to inflation Expected rate of pension increase -0.5% (1,531) (1,526) risk, interest rate risk and longevity risk. The investment strategies of the pension fund ensures diversement of investments in order to keep market volatility risk at a desired level. The pension Expected longevity +1 year (1,659) (1,658) fund Board of Directors is targeting a satisfactory level of risk and return corresponding to the Expected longevity -1 year (1,543) (1,546) maturity profile of future pension benefit payments.
223 Yara Integrated Report 2020 At the end of the year, the plan assets were invested as follows:
NOK millions, except percentages 2020 2020 2019 2019
01 THIS IS YARA Cash and cash equivalents 10 1% 33 3% Shares 446 38% 388 35% 02 YEAR IN REVIEW Other equity instruments 101 9% 95 9% Investment grade debt instruments 583 50% 575 52% 03 FROM THE BOARDROOM Properties 20 2% 20 2% 04 FINANCIAL STATEMENTS Total plan assets 1161 100% 1,113 100%
Consolidated financial statements Yara Pensjonskasse (the pension fund) does not hold any investments that do not have a quoted Contributions expected to be paid by Yara International ASA to the defined benefit plans for 2021 Financial statements for market price in an active market. Nor does it hold any financial instruments issued by Yara Group are NOK 33 million. The amount includes any premium to be paid to Yara Pensjonskasse and all Yara International ASA companies. benefits to be paid for unfunded plans. Statement from the Board and the CEO of Yara International ASA Remeasurement gains / (losses) recognized in retained earnings Auditor’s report Reconciliation of alternative NOK millions 2020 2019 performance measures in the Yara Group Cumulative amount recognized directly in retained earnings pre-tax at 1 January (219) (152) Remeasurement gains / (losses) on obligation for defined benefit plans (9) (112) Remeasurement gains / (losses) on plan assets for defined benefit plans 58 51 Social security on remeasurement gains / (losses) recognized directly in equity this year (2) (7) Cumulative amount recognized directly in retained earnings pre-tax at 31 December (172) (219) Deferred tax related to remeasurement gains / (losses) recognized directly in retained earnings 38 48 Cumulative amount recognized directly in retained earnings after tax at 31 December (134) (171)
224 Yara Integrated Report 2020 2 Remunerations and other At 31 December 2020, the number of employees in Yara International ASA was 608 (2019: 599).
Remuneration and direct ownership of shares of the Chairperson and of the Board of Directors are NOK millions 2020 2019 disclosed in note 8.1 to the consolidated financial statement.
01 THIS IS YARA Payroll and related costs Remuneration to the President and Yara management, as well as number of shares owned and Salaries (855) (821) 02 YEAR IN REVIEW Long-Term Incentive Plan, are disclosed in note 8.2 to the consolidated financial statements. Social security costs (109) (115) Net periodic pension costs (98) (99) 03 FROM THE BOARDROOM Partners and employees of Yara’s independent auditors, Deloitte AS, own no shares in Yara Inter- Total (1,063) (1,035) national ASA, or in any of its subsidiaries. Yara International ASA’s fee to Deloitte AS (Norway) for 04 FINANCIAL STATEMENTS ordinary audit was NOK 4,622 thousand (2019: NOK 4,996 thousand), fee for assurance services Yara continued to give employees in Norway an opportunity to take part in a share purchase pro- NOK 2,906 thousand (2019: NOK 952 thousand), NOK 469 thousand for tax services (2019: gram in 2020. All permanent employees in Norway have been offered shares with a discount and Consolidated financial statements NOK 54 thousand) and NOK 187 thousand for non-audit services (2019: NOK 416 thousand). given an interest-free loan with a 12-month repayment profile. In order to handle this arrangement Financial statements for Audit remuneration for the Group is disclosed in note 8.3 to the consolidated financial statement. in an efficient way, Yara has established a foundation for employees’ shares in Yara. The founda- Yara International ASA tion has purchased 40,800 shares during 2020. In total 40,941 shares have been sold during 2020 to 1,017 persons, 36 persons were allotted 20 shares and 981 persons were allotted 41 Statement from the Board and the shares. As at 31 December 2020, the foundation owns 16 shares in Yara. CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
225 Yara Integrated Report 2020 3 Intangible assets, property, plant and equipment
2020
Intangible Property, plant 01 THIS IS YARA NOK millions, except percentages and years assets 1) and equipment 2) Total
02 YEAR IN REVIEW Cost Balance at 1 January 1,350 190 1,541 03 FROM THE BOARDROOM Addition at cost 102 9 111 Balance at 31 December 1,453 199 1,652 04 FINANCIAL STATEMENTS
Consolidated financial statements Depreciation, amortization and impairment loss Balance at 1 January (654) (107) (761) Financial statements for Yara International ASA Depreciation and amortization (194) (12) (206) Balance at 31 December (847) (120) (967) Statement from the Board and the CEO of Yara International ASA Carrying value Auditor’s report Balance at 1 January 697 83 780 Reconciliation of alternative Balance at 31 December 605 79 684 performance measures in the Yara Group Useful life in years 3 - 5 4 - 50 Depreciation rate 20 - 35% 2 - 25%
1) Intangible assets mainly consist of computer software systems, patents and trademarks. 2) Property, plant and equipment for Yara International ASA consists mainly of buildings and furnishings. There were no assets pledged as security at 31 December 2020.
226 Yara Integrated Report 2020 2019
Intangible Property, plant NOK millions, except percentages and years assets 1) and equipment 2) Total
01 THIS IS YARA Cost Balance at 1 January 1,170 168 1,339 02 YEAR IN REVIEW Addition at cost 181 23 203 Derecognition (1) (1) (2) 03 FROM THE BOARDROOM Balance at 31 December 1,350 190 1,541
04 FINANCIAL STATEMENTS Depreciation, amortization and impairment loss Consolidated financial statements Balance at 1 January (497) (95) (590) Financial statements for Depreciation and amortization (158) (13) (171) Yara International ASA Balance at 31 December (654) (107) (761) Statement from the Board and the CEO of Yara International ASA Carrying value Auditor’s report Balance at 1 January 674 74 748 Balance at 31 December 697 83 780 Reconciliation of alternative performance measures in the Yara Group Useful life in years 3 - 5 4 - 50 Depreciation rate 20 - 35% 2 - 25%
1) Intangible assets mainly consist of computer software systems, patents and trademarks. 2) Property, plant and equipment for Yara International ASA consists mainly of buildings and furnishings. There were no assets pledged as security at 31 December 2019.
227 Yara Integrated Report 2020 4 Specification of items in the income statement
Revenue Sales to geographical areas 01 THIS IS YARA 2020 2019
02 YEAR IN REVIEW NOK millions External Internal Total External Internal Total
03 FROM THE BOARDROOM Norway - 83 83 - 91 91 European Union 1) - 1,968 1,968 38 1,715 1,753 04 FINANCIAL STATEMENTS Europe, outside European Union 1) 24 18 42 - 4 4 Africa - 19 19 - 21 21 Consolidated financial statements Asia - 64 64 - 57 57 Financial statements for North America - 33 33 - 35 35 Yara International ASA Latin America - 94 94 - 126 126 Statement from the Board and the Australia and New Zealand - 18 18 - 20 20 CEO of Yara International ASA Total 24 2,298 2,322 38 2,069 2,107 Auditor’s report 1) Sales to the United Kingdom are included as part of the European Union for 2019 but not for 2020. Reconciliation of alternative performance measures in Other operating expenses the Yara Group
NOK millions 2020 2019
Selling and administrative expense (1,739) (1,508) Rental and leasing 1) (59) (58) Travel expense (14) (49) Other (452) (371) Total (2,264) (1,986)
Of which research costs 2) (405) (506)
1) Expenses mainly relate to office and lease contracts for company cars. 2) Over the last few years, Yara has focused on orienting research and development resources towards commercial activities, both with respect to process and product improvements and agronomical activities.
228 Yara Integrated Report 2020 5 Financial income and expenses 6 Income taxes
NOK millions Notes 2020 2019 Specification of income tax expense
01 THIS IS YARA NOK millions 2020 2019 Dividends and group relief from subsidiaries 16,405 900 Loss on sale of shares in subsidiaries 1) - (2) 02 YEAR IN REVIEW Current tax expense 1) (20) (12) Interest income group companies 13 788 1,017 Deferred tax income/(expense) recognized in the current year (210) 306 03 FROM THE BOARDROOM Other interest income 35 34 Income tax income/(expense) (230) 294 Interest expense group companies 13 (78) (274) 04 FINANCIAL STATEMENTS Other interest expense (1,056) (1,367) 1) Withholding taxes and prior years adjustment, see specification in the table below. Interest expense defined pension liabilities 1 (33) (39) Reconciliation from nominal statutory tax rate to effective tax rate Consolidated financial statements Return on pension plan assets 1 21 28 Financial statements for Net foreign exchange gain/(loss) 999 (613) NOK millions 2020 2019 Yara International ASA Other financial income/(expense) 65 (15) Statement from the Board and the Financial income/(expense), net 17,146 (331) Income before taxes 15,921 (1,432) CEO of Yara International ASA 1) Yara Costa Rica S. de RL. Statutory tax rate 22% 22% Auditor’s report Expected income taxes at statutory tax rate (3,503) 315 Reconciliation of alternative performance measures in The tax effect of the following items: the Yara Group Group releif received from subsidiary with no tax effect 3,323 - Withholding taxes (16) (7) Prior years adjustment (4) (5) Tax law changes - - Non-deductible expenses (32) (16) Other - 7 Income tax income/(expense) (230) 294
Effective tax rate (1%) 21%
229 Yara Integrated Report 2020 Specification of deferred tax assets/(liabilities)
Reclassified from Company name Opening balance Charged to income equity to profit or loss Charged to equity Closing balance
01 THIS IS YARA Non-current items Property, plant and equipment 7 - - - 6 02 YEAR IN REVIEW Pension liabilities 120 4 - (10) 110 Other non-current assets (748) (302) 1 - (1,051) 03 FROM THE BOARDROOM Other non-current liabilities and accruals 499 (353) - - 146
04 FINANCIAL STATEMENTS Total (125) (652) 1 (10) (788)
Consolidated financial statements Current items Financial statements for Accrued expenses 29 69 - - 98 Yara International ASA Total 29 69 - - 98 Statement from the Board and the CEO of Yara International ASA Tax loss carry forwards 1,236 372 - - 1,608 Auditor’s report Net deferred tax asset/(liability) 1,140 (210) 1 (10) 920
Reconciliation of alternative Tax loss carry forwards are expected to be fully utilized by taxable interest income on group funding and taxable group contributions from Yara’s operating companies in Norway. performance measures in the Yara Group
230 Yara Integrated Report 2020 7 Shares in subsidiaries
Total equity in Net income/ Ownership by the company (loss) 2020 Carrying value Carrying value other group Registered Functional 2020 functional in functional 2020 NOK 2019 NOK Company name Ownership 1) companies office currency currency millions currency millions millions millions 01 THIS IS YARA
02 YEAR IN REVIEW Subsidiaries owned by Yara International ASA Fertilizer Holdings AS 100% - Norway NOK 24,185 8,796 16,178 16,178 03 FROM THE BOARDROOM Yara Norge AS 100% - Norway NOK 2,317 1,110 1,303 1,303 Yara Asia Pte. Ltd. 100% - Singapore USD 1,271 90 1,114 1,114 04 FINANCIAL STATEMENTS Yara Colombia S.A. 70.1% 29.3% Colombia COP 476,125 88,057 763 763 Yara North America Inc. 100% - USA USD 386 20 468 468 Consolidated financial statements Yara Guatemala S.A. 100% - Guatemala GTQ 176 28 24 24 Financial statements for Yara Lietuva, UAB 100% - Lithuania EUR (2) 2 1 1 Yara International ASA Yara International Employment Co. AG 100% - Switzerland EUR 2 - 1 1 Statement from the Board and the Profesionistas AAL 0.04% 99.96% Mexico MXN 3 2 - - CEO of Yara International ASA Operaciones BPT 10% 90% Mexico MXN - - - - Auditor’s report Total 19,853 19,853 Reconciliation of alternative 1) Percentage of shares owned equals percentage of voting shares owned. A number of the above mentioned companies also own shares in other companies as specified in their annual reports. See alsonote 8.4 to the consolidated financial statements. performance measures in the Yara Group
231 Yara Integrated Report 2020 8 Specification of other balance sheet items 9 Guarantees
NOK millions Notes 2020 2019 NOK millions 2020 2019
01 THIS IS YARA Other non-current assets Guarantees (off-balance sheet) Surplus on funded defined benefit plans 1 417 348 Guarantees for debt in subsidiaries 7,902 5,749 02 YEAR IN REVIEW Long-term fair value derivative hedging instrument 98 2 Non-financial guarantees 8,614 9,658 03 FROM THE BOARDROOM Interest rate swap designated for hedging (external) 31 4 Total 16,515 15,408 Other 47 57 04 FINANCIAL STATEMENTS Total 593 411 Yara International ASA provides guarantees arising in the ordinary course of business, including performance bonds and various payment or financial guarantees. See note 5.8 Secured debt and guarantees to the consolidated financial statements for further information about guarantees. Consolidated financial statements Inventories Financial statements for Finished goods 18 11 Yara International ASA Raw materials 6 1 10 Financial risks and hedge accounting Statement from the Board and the Total 23 12 Financial risks in Yara and the use of derivative instruments are described in note 6.1 to the CEO of Yara International ASA consolidated financial statement, Financial risks. The exposure to credit risk is represented by Auditor’s report Other liquid assets the carrying amount of each class of financial assets, including derivative financial instruments, Bank deposits with maturity between three recorded in the balance sheet. Reconciliation of alternative - - months and one year performance measures in the Yara Group Total - - Liquidity risk Yara International ASA manages liquidity risk by maintaining adequate reserves and committed Bank loans and other short-term bank facilities and by continuously monitoring forecasted and actual cash flows. Non-current interest-bearing debt intercompany receivables are related to funding of subsidiaries and have a maturity profile match- External loans 985 2,033 ing the external debt maturities (see note 12 Long-term debt for details). Current intercompany Interest-bearing loans from group assocoates receivables and payables mainly reflect intercompany current account balances and will fluctuate 333 346 and joint arrangements with fertilizer seasons. Committed liquidity reserves are maintained to meet unforeseen events. Bank overdraft 200 141 Total 1,518 2,519
232 Yara Integrated Report 2020 Yara International ASA’s derivative instruments outstanding at 31 December are shown in the Hedge accounting following table. Fair value hedges In December 2014, Yara designated a portfolio of long-term NOK fixed-to-floating interest rate
NOK millions 2020 2019 swaps as hedging instruments. The hedged risk is the change in fair value due to changes in risk- free interest rates (NIBOR) of the NOK 700 million and NOK 600 million fixed rate bond debt 01 THIS IS YARA from 2014. The swaps have different interest payment dates (quarterly vs. annually), but identical Fair value of derivatives interest basis and maturity as the hedged debt and are assessed to be highly effective. 02 YEAR IN REVIEW Forward foreign exchange contracts (external) (323) (31) Forward foreign exchange contracts (Yara Group internal) (187) 7 In December 2017, Yara designated a portfolio of long-term NOK and SEK fixed-to-floating 03 FROM THE BOARDROOM Cross currency swaps (external) (159) (631) interest rate swaps as hedging instruments. The hedged risk is the change in fair value due to changes in risk-free interest rates (NIBOR) of the NOK 1,000 million and NOK 1,000 million fixed Interest rate swaps designated for hedging (external) 98 (61) 04 FINANCIAL STATEMENTS rate bond debt and the change in fair value due to changes in risk-free interest rates (STIBOR) of Balance at 31 December (571) (716) the SEK 800 million fixed rate bond debt, all from 2017. The swaps have different interest Consolidated financial statements payment dates (quarterly vs. annually), but identical interest basis and maturity as the hedged Derivatives presented in the balance sheet Financial statements for debt and are assessed to be highly effective. Yara International ASA Non-current assets 128 6 Current assets 2 10 Subsequent to initial recognition, Yara measures interest-bearing borrowings at amortized cost. Statement from the Board and the However, the designation of interest rate swaps as hedging instruments and use of hedge CEO of Yara International ASA Non-current liabilities (190) (697) accounting enables Yara to include the fair value of changes in interest rates in the carrying Current liabilities (512) (35) Auditor’s report value of the bonds. The corresponding adjustment in the Consolidated Statement of Income Balance at 31 December (571) (716) offsets the effects of the recognized interest rate swaps, leading to less volatility in net income. Reconciliation of alternative performance measures in the Yara Group Cash flow hedges Forward foreign exchange contracts Yara had no cash flow hedges in 2020 or 2019. However, Yara has used derivative instruments to Yara is committed to the following outstanding forward foreign exchange contracts. hedge cash flows of planned transactions in the past and may do so also in the future.
NOK millions 2020 2019 In 2007, Yara used treasury locks to hedge the future cash flows of a USD 300 million portion of the June 2009 bond issue. The loss on these contracts was recognized directly in equity and was proportionally reclassified into interest expense and deferred tax until 2019 when the bond Forward foreign exchange contracts (external), notional amount 8,301 2,268 expired. Amount reclassified to interest expense in 2020 was NOK 0 million after tax (2019: Forward foreign exchange contracts (Yara Group internal), 6,089 6,939 NOK 5 million). notional amount
All outstanding forward foreign exchange contracts at 31 December 2020 have maturity in 2021, except non-deliverable forward contracts equivalent to NOK 504 million that mature in 2022. External buy positions are mainly in US dollars against Norwegian kroner or Brazilian reals. External sell positions are in various operating currencies towards Norwegian kroner.
233 Yara Integrated Report 2020 Effect on financial position and performance in 2020 Accumulated amount Change of hedge adjustment in value of on the hedged item Line item in the hedged included in the the Balance item used for Hedge Carrying amount carrying amount Line item in sheet in which calculating Change in ineffectiveness of the hedged item 1) of the hedged item the Balance sheet the hedging hedge value of recognized 01 THIS IS YARA in which the hedged instrument is ineffective- the hedging in Income Company name Currency Hedge rates Assets Liabilities Assets Liabilities item is included included ness 2) instrument 2) statement 02 YEAR IN REVIEW Fair value hedges 03 FROM THE BOARDROOM Interest rate risk Long-term Other long-term - Fixed interest, NOK bonds (2014) NOK 3M NIBOR - 1,332 - 32 (43) 43 - 04 FINANCIAL STATEMENTS interest-bearing debt liabilities Long-term Other long-term - Fixed interest, NOK bonds (2017) NOK 3M NIBOR - 2,065 - 68 (119) 119 - interest-bearing debt liabilities Consolidated financial statements Long-term Other long-term - Fixed interest, SEK bonds (2017) SEK 3M STIBOR - 841 - 6 (4) 4 - Financial statements for interest-bearing debt liabilities Yara International ASA 1) The designated nominal amounts of the hedging instruments equal the nominal amounts of the hedged items. Statement from the Board and the 2) All amounts are pre-tax. CEO of Yara International ASA For either hedging category, there are no balances remaining from a hedging relationship for which hedge accounting is no longer applied. Auditor’s report Reconciliation of alternative performance measures in Effect on financial position and performance in 2019 the Yara Group Accumulated amount Change of hedge adjustment in value of on the hedged item Line item in the hedged included in the the Balance item used for Hedge Carrying amount carrying amount Line item in sheet in which calculating Change in ineffectiveness of the hedged item 1) of the hedged item the Balance sheet the hedging hedge value of recognized in which the hedged instrument is ineffective- the hedging in Income Company name Currency Hedge rates Assets Liabilities Assets Liabilities item is included included ness 2) instrument 2) statement
Fair value hedges Interest rate risk Long-term Other long-term - Fixed interest, NOK bonds (2014) NOK 3M NIBOR - 1,288 11 - 9 (9) - interest-bearing debt liabilities Long-term Other long-term - Fixed interest, NOK bonds (2017) NOK 3M NIBOR - 1,946 52 - 1 (1) - interest-bearing debt liabilities Long-term Other long-term - Fixed interest, SEK bonds (2017) SEK 3M STIBOR - 756 - 2 (2) 2 - interest-bearing debt liabilities
1) The designated nominal amounts of the hedging instruments equal the nominal amounts of the hedged items. 2) All amounts are pre-tax.
234 Yara Integrated Report 2020 For either hedging category, there are no balances remaining from a hedging relationship for 11 Number of shares outstanding, shareholders, which hedge accounting is no longer applied. equity reconciliation etc. Specific risks associated with the upcoming interest rate benchmark reform Yara International ASA was established 10 November 2003. The company was established with Yara is exposed to NIBOR, STIBOR and USD LIBOR interest rate benchmarks subject to the 01 THIS IS YARA a share capital of 108,610,470 consisting of 63,888,512 shares at NOK 1.70 per share. At 31 De- upcoming interest rate benchmark reform. Please see note 6.1 Financial risks to the consolidated cember 2020, the company has a share capital of NOK 455,824,803 consisting of 268,132,237 financial statement for further information about the transition. 02 YEAR IN REVIEW ordinary shares at NOK 1.70 per share.
03 FROM THE BOARDROOM Yara owns 5,131,128 own shares at 31 December 2020. For further information on these issues see note 5.1 to the consolidated financial statement. 04 FINANCIAL STATEMENTS Shareholders holding 1% or more of the total 268,132,237 shares issued as of 31 December 2020 Consolidated financial statements are according to information from Nasdaq. Financial statements for Name Number of shares Holding (%) Yara International ASA Statement from the Board and the Ministry of Trade, Industry and Fisheries 97,094,621 36.2% CEO of Yara International ASA Norwegian National Insurance Scheme fund 18,990,573 7.1% Auditor’s report Sprucegrove Investment Management, Ltd 7,385,570 2.8% Reconciliation of alternative The Vanguard Group, Inc. 5,253,687 2.0% performance measures in BlackRock Instritutional Trust Company, N.A. 4,988,939 1.9% the Yara Group Polaris Capital Management, LLC 4,476,599 1.7% Storebrand Kapitalforvaltning AS 3,746,535 1.4% DNB Asset Management AS 3,640,987 1.4% Templeton Invenstment Counsel, L.L.C. 3,384,604 1.3% KLP Forsikring 3,225,375 1.2% Fidelity Management & Research Company 3,082,553 1.1% State Street Global Advisors (US) 3,025,183 1.1% Arrowstreet Capital, Limited Partnership 2,887,393 1.1% Handelsbanken Asset Management 2,725,235 1.0% Nordea Funds Oy 2,619,112 1.0%
235 Yara Integrated Report 2020 Shareholders’ equity
Total shareholders’ NOK millions Paid-in capital Retained earnings equity
01 THIS IS YARA Balance 31 December 2018 581 19,942 20,522 02 YEAR IN REVIEW Net income of the year - (1,138) (1,138) 03 FROM THE BOARDROOM Dividend proposed - (4,054) (4,054) Cash flow hedges - 2 2 04 FINANCIAL STATEMENTS Actuarial gain/(loss) 1) - (53) (53) Adjustment to proposed dividend previous years - (2) (2) Consolidated financial statements Treasury shares 2) (4) (754) (757) Financial statements for Balance 31 December 2019 577 13,943 14,521 Yara International ASA Statement from the Board and the Net income of the year - 15,690 15,690 CEO of Yara International ASA Dividend proposed 5) - (5,202) (5,202) Auditor’s report Actuarial gain/(loss) 1) - 37 37 Reconciliation of alternative Additional dividend to proposed dividend for 2020 6) - (4,766) (4,766) performance measures in Adjustment to proposed dividend previous years 9 9 the Yara Group Treasury shares 3) 4) (17) (3,559) (3,576) Balance 31 December 2020 560 16,153 16,713
1) Yara International ASA has decided to use the option in NRS 6A to adopt IAS19. For further information, see the accounting principles note 1. 2) As approved by General Meeting 7 May 2019. 3) As approved by General Meeting 7 May 2020. 4) See note 5.1 to the consolidated financial statement for more information. 5) Based on total shares issued less 5.131.128 own shares less commitment to redeem 2.912.838 shares from the Norwegian State. 6) Additional dividend as approved in Extraordinary General Meeting 17 November 2020, NOK 18 per share.
236 Yara Integrated Report 2020 12 Long-term debt
Denominated amounts 2020 Carrying amounts Weighted average Currency 01 THIS IS YARA NOK millions Notes Maturity interest rates millions NOK millions 2020 2019
02 YEAR IN REVIEW Unsecured debenture bonds in NOK (Coupon 2.55%) 6.1 2021 2.6% 700 700 708 693 Unsecured debenture bonds in NOK (Coupon NIBOR + 0.75%) 2022 1.1% 1,250 1,250 1,249 1,250 03 FROM THE BOARDROOM Unsecured debenture bonds in SEK (Coupon STIBOR + 1.00%) 2022 0.7% 450 470 470 425 04 FINANCIAL STATEMENTS Unsecured debenture bonds in SEK (Coupon 1.10%) 6.1 2022 1.2% 800 836 841 756 Unsecured debenture bonds in NOK (Coupon 3.00%) 6.1 2024 3.0% 600 600 624 595 Consolidated financial statements Unsecured debenture bonds in NOK (Coupon 2.45%) 6.1 2024 2.5% 1,000 1,000 1,025 974 Financial statements for Unsecured debenture bonds in USD (Coupon 3.80%) 6.1 2026 3.9% 500 4,397 4,246 4,378 Yara International ASA Unsecured debenture bonds in NOK (Coupon 2.90%) 6.1 2027 2.9% 1,000 1,000 1,040 972 Statement from the Board and the Unsecured debenture bonds in USD (Coupon 4.75%) 6.1 2028 4.8% 1,000 - 8,488 8,752 CEO of Yara International ASA Unsecured debenture bonds in USD (Coupon 3.15%) 6.1 2030 3.2% 750 6,595 6,352 - Auditor’s report Unsecured bank loans in USD 1.3% 484 4,252 4,111 7,584 Reconciliation of alternative performance measures in Outstanding long-term debt 29,154 26,377 the Yara Group Less: Current portion (967) (3,342)
Total 28,187 23,035
237 Yara Integrated Report 2020 At 31 December 2020, the fair value of the long-term debt, including the current portion, is NOK 31,938 million and the carrying value is NOK 29,154 million. See notes 5.3 Interest-bearing debt and 6.1 Financial risks to the consolidated financial statements for further information about long-term debt.
Payments on long-term debt fall due as follows
01 THIS IS YARA NOK millions, except percentages and denominated amounts Debentures Bank loans Other long-term debt Total 1)
02 YEAR IN REVIEW 2021 708 260 - 967 2022 2,559 1,534 - 4,093 03 FROM THE BOARDROOM 2023 - 260 - 260
04 FINANCIAL STATEMENTS 2024 1,649 1,538 - 3,187 2025 - 260 - 260 Consolidated financial statements Thereafter 20,127 260 - 20,387 Financial statements for Total 25,043 4,111 - 29,154 Yara International ASA 1) Including current portion. Statement from the Board and the CEO of Yara International ASA Auditor’s report Reconciliation of alternative performance measures in the Yara Group
238 Yara Integrated Report 2020 13 Transactions with related parties
Transactions with related parties are mainly associated with the group treasury function and rendering of group services by the employees of Yara International ASA.
01 THIS IS YARA NOK millions Notes 2020 2019 NOK millions Notes 2020 2019 02 YEAR IN REVIEW Income statement Fertilizer Holdings AS (16) (47) 03 FROM THE BOARDROOM Yara Belgium S.A. 1,500 1,297 Yara Canada Holding Inc. (12) (30) Yara Norge AS 80 88 Yara Asia Pte Ltd (10) (33) 04 FINANCIAL STATEMENTS Yara Sluiskil B.V. 76 80 Yara Switzerland Ltd (10) (47) Consolidated financial statements Yara Brasil Fertilizantes S.A. 59 67 Yara Norge AS (9) (13) Other 582 537 Yara Caribbean Ltd - (32) Financial statements for Yara International ASA Internal revenues 4 2,298 2,069 Other (22) (72) Interest expense group companies 5 (78) (274) Statement from the Board and the CEO of Yara International ASA Fertilizer Holdings AS 14,000 - Yara Norge AS 1,300 900 Non-current assets Auditor’s report Yara Asia Pte Ltd 1,032 - Yara Holding Netherlands B.V. 14,726 18,796 Reconciliation of alternative Yara Guatemala S.A. 73 - Yara Sluiskil B.V. 4,784 4,505 performance measures in the Yara Group Dividends and group relief from subsidiaries 5 16,405 900 Yara Norge AS 4,684 4,831 Yara Suomi Oy 3,611 3,105 Yara Holding Netherlands B.V. 201 261 Yara Investments Germany SE 3,289 3,166 Yara Norge AS 136 177 Yara Investment GmbH 1,749 1,648 Yara Nederland B.V. 95 274 Yara AB 1,686 1,547 Yara Sluiskil B.V. 66 61 Yara France SAS 1,465 1,380 Yara Suomi Oy 48 32 Other 2,076 5,949 Yara AB 40 32 Intercompany receivables 38,070 44,927 Other 202 181 Interest income group companies 5 788 1,018
239 Yara Integrated Report 2020 NOK millions Notes 2020 2019
Current assets Fertilizer Holding AS 4,000 999 01 THIS IS YARA Yara AS 3,942 1,080 02 YEAR IN REVIEW Yara Norge AS 1,344 - Yara Belgium S.A. 471 999 03 FROM THE BOARDROOM Yara Italia S.p.A. 451 523 Yara Phophates Oy 355 467 04 FINANCIAL STATEMENTS Freeport Ammonia LLC 354 456 Yara LPG Shipping AS 303 349 Consolidated financial statements Other 1,512 1,752 Financial statements for Intercompany receivables 12,733 9,202 Yara International ASA Statement from the Board and the Current liabilities CEO of Yara International ASA Yara Nederland B.V. (7,372) (6,579) Auditor’s report Yara Asia Pte Ltd (3,066) (3,181) Reconciliation of alternative Yara GmbH & Co. KG (2,953) (2,536) performance measures in Yara Tertre S.A. (2,680) (2,007) the Yara Group Yara Italia S.p.A. (1,980) (1,985) Yara Switzerland Ltd (1,737) (1,912) Other (9,001) (10,416) Intercompany payables (28,789) (28,615)
Trinidad Nitrogen Company Ltd. (116) (118) Yara Freeport LLC DBA Texas Ammonia (217) (198) Yara Pilbara Nitrates Pty Ltd - (12) Other - (17) Interest-bearing loans from Group associates and (333) (345) joint arrangements
Remuneration to the Board of Directors and Yara Management are disclosed in notes 8.1 and 8.2 to the consolidated financial statements. Yara International ASA has transactions with Yara Pensjonskasse (pension fund). See note 5 for more information.
240 Yara Integrated Report 2020 Statement from the Board and the CEO of Yara International ASA
01 THIS IS YARA
02 YEAR IN REVIEW The Board of Directors and the CEO have today considered and approved the integrated report for The Board of Directors of Yara International ASA Yara International ASA (“Company”) and the Yara Group (“Group”) for the 2020 calendar year and Oslo, 25 March 2021 as of 31st December, 2020. 03 FROM THE BOARDROOM
The consolidated financial statements have been prepared in accordance with IFRS as adopted by 04 FINANCIAL STATEMENTS EU as well as additional information requirements as per the Norwegian Accounting Act. The finan- Trond Berger Kimberly Lein-Mathisen Adele Bugge Norman Pran cial statements for the Company have been prepared in accordance with the Norwegian Accounting Consolidated financial statements Chairperson Vice chair Board member Act and generally accepted accounting practice in Norway. Financial statements for Yara International ASA We confirm to the best of our knowledge that: • The 2020 financial statements for the Company and the Group have been prepared in accor- Statement from the Board and the John Thuestad Rune Bratteberg Birgitte Ringstad Vartdal CEO of Yara International ASA dance with applicable accounting standards Board member Board member Board member • The information in the financial statements gives a true and fair view of the Company’s and the Auditor’s report Group’s assets, liabilities, financial position and result as of 31st December, 2020 Reconciliation of alternative • The integrated report 2020 has been prepared in accordance with the International Integrated 1) performance measures in Reporting Framework (IR) and meets the information requirements of the Norwegian accounting Ragnhild Flesland Høimyr Geir O. Sundbø Håkon Reistad Fure the Yara Group act with regard to the Report of the Board of Directors and statements on corporate governance Board member Board member Board member and corporate social responsibility • The integrated report for the Company and the Group; - gives a true and fair view of the Company’s and the Group’s development, performance and financial position, and Øystein Kostøl Svein Tore Holsether Board member President and CEO - includes a description of the principal risks and uncertainty factors facing the Company and the Group • That the country-by-country report for 2020 has been prepared in accordance with the Norwegian Accounting Act § 3-3d and the Norwegian Security Trading Act § 5-5a
1) 2013 edition of the International Integrated Reporting Framework as published by the International Integrated Reporting Council (IIRC) on 241 https://integratedreporting.org/ Yara Integrated Report 2020 The below listed parts of the Yara Annual Report 2020 constitutes the Report of the Board of Directors
Norwegian Accounting Act Content Annual Report chapter reference Page reference 01 THIS IS YARA Introduction 4 Section 3-3a, Information regarding the nature and location of the business, including information on any branch Board message 99-107 02 YEAR IN REVIEW 1st para offices. Note 8.4 211-213 Note 2.3 126-132 03 FROM THE BOARDROOM Prosperity performance 58-65 04 FINANCIAL STATEMENTS Strategic priorities 20-24 Review of the development and results of the company’s operations and position together with a Section 3-3a, Strategic risks 25-27 description of the key risks and uncertainty factors facing the company, hereunder also information on 2nd para People risks 46-47 Consolidated financial statements research and development activities. Planet risks 53-54 Financial statements for Prosperity risks 66-68 Yara International ASA A description that provides a basis for assessing the company’s further outlook, including whether the Statement from the Board and the Section 3-3a, results for the year agree with previously stated target results and expected developments and give Board message 99-107 CEO of Yara International ASA 5th para reason for any discrepancy. Auditor’s report Prosperity risk 66-68 Reconciliation of alternative Section 3-3a, Information regarding any financial risk that is significant to the evaluation of the company’s assets, Note 6.1 183-190 performance measures in 6th para liabilities, financial position and results. Note 1 120-121 the Yara Group
Section 3-3a, 7th para, cfr. Information regarding the going concern assumption. Prosperity performance 58-65 Section 4-5
Section 3-3a, Proposal for the allocation of profit or settlement of loss. Board message 99-107 8th para
Section 3-3a, Information about the work environment, along with an overview of implemented measures relevant to People performance 43-45 9th para the working environment and including information on injuries, accidents and sick leave rates. Board message 99-107
Information on matters relating to the business, hereunder its factor inputs and products, which may 50-52 Planet performance Section 3-3a, result in a not insignificant impact on the external environment. The environmental impact each 99-107 Board message 10th para aspect of the business has or may have, as well as measures implemented or planned implemented to 29-30 Managing outcomes and value creation prevent or reduce any negative environmental impacts, shall be stated.
Information on whether insurances covering the board members’ and CEO’s potential liabilities Section 3-3a, towards the company and third parties are maintained, including information on the relevant insurance (To be reported for 2021 onwards.) 11th para coverage. 242 Yara Integrated Report 2020 Norwegian Accounting Act Content Annual Report chapter reference Page reference
Section 3-3a, 12th para, Shareholders information: cfr. Securities Trading Act A description of any provisions of articles of association that restrict the right to trade N/A 01 THIS IS YARA Section 5-8a (1) in the shares of the company.
02 YEAR IN REVIEW Section 3-3a, 12th para, Shareholders information: cfr. Securities Trading Act A description of who exercises the rights attached to shares in any employee share schemes where N/A 03 FROM THE BOARDROOM Section 5-8a (2) authority is not exercised directly by the employees covered by the scheme.
04 FINANCIAL STATEMENTS Section 3-3a, 12th para, Shareholders information: cfr. Securities Trading Act Any agreements between shareholders which are known to the company and which restrict the N/A Section 5-8a (3) possibilities of trading in or exercising voting rights attached to shares. Consolidated financial statements Financial statements for Section 3-3a, 12th para, Shareholders information: Yara International ASA cfr. Securities Trading Act Any significant agreements to which the company is a party, the terms of which take effect, alter or N/A Section 5-8a (4) terminate as a result of a takeover bid, and a description of those terms. Statement from the Board and the CEO of Yara International ASA Section 3-3b Report on corporate governance Corporate governance 76-98 Auditor’s report Reconciliation of alternative Board message 99-107 performance measures in People performance 43-45 the Yara Group People risk 46-47 Section 3-3c, first para Report on social responsibility Planet performance 50-52 Planet risk 53-54 Prosperity risk 66-68
Separate report available on Latest annual Section 3-3d Report on payments to the authorities, etc. (country by country reporting) report page, yara.com
Norwegian Gender Equality Act
Accounting for the factual status of gender equality, equal pay and diversity, and actions taken People performance 43-45 Section 26a to fulfill requirements Board message 99-107
243 Yara Integrated Report 2020 Auditor’s report
01 THIS IS YARA Deloitte AS Dronning Eufemias gate 14 Tel: +47 23 27 90 00 02 YEAR IN REVIEW Postboks 221 Sentrum www.deloitte.no NO-0103 Oslo, Norway 03 FROM THE BOARDROOM To the General Meeting of Yara International ASA 04 FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT Consolidated financial statements Report on the Audit of the Financial Statements Basis for Opinion Financial statements for Opinion We conducted our audit in accordance with laws, regulations, and auditing standards and practices Yara International ASA We have audited the financial statements of Yara International ASA, which comprise: generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities Statement from the Board and the under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial CEO of Yara International ASA • The financial statements of the parent company Yara International ASA (the Company), which Statements section of our report. We are independent of the Company and the Group as required by comprise the balance sheet as at 31 December 2020, the income statement and cash flow statement laws and regulations, and we have fulfilled our other ethical responsibilities in accordance with these Auditor’s report for the year then ended, and notes to the financial statements, including a summary of significant requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to Reconciliation of alternative accounting policies, and provide a basis for our opinion. performance measures in • The consolidated financial statements of Yara Inernational ASA and its subsidiaries (the Group), which the Yara Group comprise the statement of financial position as at 31 December 2020, the statement of income, Key Audit Matters statement of comprehensive income, statement of changes in equity and statement of cash flows Key audit matters are those matters that, in our professional judgment, were of most significance in our for the year then ended, and notes to the financial statements, including a summary of significant audit of the financial statements of the current period. These matters were addressed in the context accounting policies. of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In our opinion: • The financial statements are prepared in accordance with the law and regulations. The key audit matters identified in our audit are: • The accompanying financial statements give a true and fair view of the financial position of the • Tax assets and liabilities Company as at 31 December 2020, and its financial performance and its cash flows for the year then • Impairment of goodwill and property, plant and equipment ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. • The accompanying consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each Organisasjonsnummer: 980 211 282 DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.no to learn more. 244 © Deloitte AS Yara Integrated Report 2020 Page 2 Independent Auditor’s Report - Yara International ASA
01 THIS IS YARA
02 YEAR IN REVIEW Tax assets and liabilities
03 FROM THE BOARDROOM Key audit matter How the matter was addressed in the audit As detailed in note 1 and 2.8, the Group has recognized deferred tax assets of USD 485 million. Total Our audit procedures included the following, among others: 04 FINANCIAL STATEMENTS unrecognized deferred tax assets are USD 312 million, of which USD 133 million represent unused tax losses in Brazil. Furthermore, Yara’s operations in Brazil also generate tax credits. As disclosed in note 1 • We evaluated relevant controls associated with accounting for tax balances, including deferred tax Consolidated financial statements and 4.6, the Group has recognized an amount of USD 125 million in tax credits related to the operations assets, tax credits and uncertain tax positions. Financial statements for in Brazil. Recognition of these assets are based on management assumptions related to future operating Yara International ASA results and timing of utilization. • We involved our tax specialists in evaluating management’s judgments and conclusions. Statement from the Board and the CEO of Yara International ASA As detailed in note 1 and 2.8, management applies judgment to determine to what extent these deferred • We challenged the appropriateness of management’s assumptions and estimates in relation to tax assets and tax credits qualify for recognition in the statement of financial position. This involves the likelihood of generating future taxable profits to support the recognition of deferred tax assets. Auditor’s report judgment as to the likelihood of the realization of deferred tax assets and tax credits. The expectation We evaluated the forecasted taxable profits and consistency of these forecasts with historical Reconciliation of alternative that the benefit of these deferred tax assets and tax credits will be realized is dependent on sufficient performance. performance measures in taxable profits in future periods and the ability to utilize the tax credits. Recoverability of the tax credits is the Yara Group also dependent on interpretation of laws and regulations, which may be subject to change over time. • We evaluated management’s assessment of the probable outcome related to uncertain tax positions.
As detailed in note 1 and 5.6, the Group is engaged in a number of juridical and administrative • We reviewed applicable third-party evidence and correspondence with tax authorities. proceedings related to disputed tax matters with uncertain outcome. Management is required to make certain judgments and estimates to recognize and measure the effect of uncertain tax positions. • We considered the adequacy of the Group’s disclosures related to uncertain tax positions, deferred tax assets and tax credits. Due to the significant management judgment involved in estimation and recognition of deferred tax assets, uncertain tax positions and tax credits, we have assessed this to be a Key Audit Matter.
245 Yara Integrated Report 2020 Page 3 Independent Auditor’s Report - Yara International ASA
01 THIS IS YARA
02 YEAR IN REVIEW Impairment of goodwill, property, plant and equipment
03 FROM THE BOARDROOM Key audit matter How the matter was addressed in the audit As disclosed in note 1, 4.1 and 4.2, the Group has recognized goodwill of USD 831 million and property, Our audit procedures included the following, among others: 04 FINANCIAL STATEMENTS plant and equipment (PP&E) of USD 8,579 million. The Company’s goodwill is tested for impairment on an annual basis while PP&E is tested for impairment when events or changes in circumstances indicate • We evaluated relevant controls associated with the impairment review process. Consolidated financial statements that the carrying amount of the asset may not be recoverable. Financial statements for • We challenged management’s key assumptions used in the cash flow forecasts included within the Yara International ASA Determining whether goodwill and PP&E are impaired requires estimation of the value in use. As impairment models. Statement from the Board and the disclosed in note 4.7, the value in use calculation requires management to make significant estimates and CEO of Yara International ASA assumptions related to future commodity prices, gas prices as well as assumptions related to discount • We challenged specifically the urea- and ammonia prices, gas prices, assumed production levels, capital rates, future production levels and capital expenditures. Changes in these assumptions could have a expenditure and discount rate assumptions, including consideration of the risk of management bias. Auditor’s report significant impact on the value of goodwill and PP&E. Reconciliation of alternative • We compared urea- and ammonia and gas prices to third party publications. performance measures in Net impairment losses of USD 46 million were recognized in the year ended 31 December 2020. the Yara Group Due to the significant judgment involved in determining the assumptions used in the testing for • We used internal valuation specialists in assessing discount rate assumptions used and testing the impairment of goodwill, property, plant and equipment we have assessed this to be a Key Audit Matter. models.
• We validated the mathematical accuracy of cash flow models and agreed relevant data to the latest production plans and approved budgets.
• We considered the adequacy of the disclosures provided by the Group in relation to its impairment reviews.
246 Yara Integrated Report 2020 Page 4 Independent Auditor’s Report - Yara International ASA
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02 YEAR IN REVIEW Other information Auditor’s Responsibilities for the Audit of the Financial Statements Management is responsible for the other information. The other information comprises information in the Our objectives are to obtain reasonable assurance about whether the financial statements as a whole integrated report, except the financial statements and our auditor’s report thereon. are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report 03 FROM THE BOARDROOM that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee Our opinion on the financial statements does not cover the other information and we do not express any that an audit conducted in accordance with laws, regulations, and auditing standards and practices 04 FINANCIAL STATEMENTS form of assurance conclusion thereon. generally accepted in Norway, including ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, Consolidated financial statements In connection with our audit of the financial statements, our responsibility is to read the other information they could reasonably be expected to influence the economic decisions of users taken on the basis of Financial statements for and, in doing so, consider whether the other information is materially inconsistent with the financial these financial statements. Yara International ASA statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. Statement from the Board and the As part of an audit in accordance with laws, regulations, and auditing standards and practices generally CEO of Yara International ASA If, based on the work we have performed, we conclude that there is a material misstatement of this other accepted in Norway, including ISAs, we exercise professional judgment and maintain professional information, we are required to report that fact. We have nothing to report in this regard. skepticism throughout the audit. We also: Auditor’s report Reconciliation of alternative Responsibilities of the Board of Directors and the President and CEO for the Financial Statements • identify and assess the risks of material misstatement of the financial statements, whether due to performance measures in The Board of Directors and the President and CEO (Management) are responsible for the preparation fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit the Yara Group in accordance with law and regulations, including a true and fair view of the financial statements of the evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting Company in accordance with the Norwegian Accounting Act and accounting standards and practices a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation • obtain an understanding of internal control relevant to the audit in order to design audit procedures of financial statements that are free from material misstatement, whether due to fraud or error. that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s or the Group’s internal control. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going • evaluate the appropriateness of accounting policies used and the reasonableness of accounting concern. The financial statements of the Company use the going concern basis of accounting insofar as estimates and related disclosures made by management. it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to • conclude on the appropriateness of management’s use of the going concern basis of accounting cease operations, or has no realistic alternative but to do so. and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. 247 Yara Integrated Report 2020 Page 5 Independent Auditor’s Report - Yara International ASA
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02 YEAR IN REVIEW • evaluate the overall presentation, structure and content of the financial statements, including the Report on Other Legal and Regulatory Requirements disclosures, and whether the financial statements represent the underlying transactions and events in Opinion on the integrated report a manner that achieves a true and fair view. 03 FROM THE BOARDROOM Based on our audit of the financial statements as described above, it is our opinion that the information presented in the integrated report concerning the financial statements, required by the Norwegian • obtain sufficient appropriate audit evidence regarding the financial information of the entities or Accounting Act section 3-3a, 3-3b and 3-3-c (the Board of Directors’ report, the statements on 04 FINANCIAL STATEMENTS business activities within the Group to express an opinion on the consolidated financial statements. Corporate Governance and Corporate Social Responsibility) and the going concern assumption is We are responsible for the direction, supervision and performance of the group audit. We remain consistent with the financial statements and complies with the law and regulations. Consolidated financial statements solely responsible for our audit opinion. Financial statements for Opinion on Registration and Documentation Yara International ASA We communicate with those charged with governance regarding, among other matters, the planned Based on our audit of the financial statements as described above, and control procedures we have Statement from the Board and the scope and timing of the audit and significant audit findings, including any significant deficiencies in considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) CEO of Yara International ASA internal control that we identify during our audit. 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and Auditor’s report We also provide those charged with governance with a statement that we have complied with relevant documentation of the Company’s accounting information in accordance with the law and bookkeeping Reconciliation of alternative ethical requirements regarding independence, and to communicate with them all relationships and other standards and practices generally accepted in Norway. performance measures in matters that may reasonably be thought to bear on our independence, and where applicable, related the Yara Group safeguards. Oslo, 25 March 2021 From the matters communicated with those charged with governance, we determine those matters Deloitte AS that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so Aase Aa. Lundgaard would reasonably be expected to outweigh the public interest benefits of such communication. State Authorised Public Accountant (Norway)
248 Yara Integrated Report 2020 Reconciliation of alternative performance measures in the Yara Group
Yara makes regular use of certain non-GAAP financial alternative performance measures Operating income 01 THIS IS YARA (APMs), both in absolute terms and comparatively from period to period. The APMs used are the Operating income is directly identifiable from Yara’s consolidated statement of income and is following: considered key information in order to understand the Group’s financial performance. It provides 02 YEAR IN REVIEW performance information which covers all activities which normally are to be considered as - Operating income “operating”. Share of net income in equity-accounted investees is however not included. 03 FROM THE BOARDROOM - EBITDA - EBITDA excluding special items EBITDA 04 FINANCIAL STATEMENTS - Return on invested capital (ROIC) Earnings before interest, tax, depreciation and amortization (EBITDA) is used for providing - Fixed cost consistent information on Yara’s operating performance and debt servicing ability. Such a Consolidated financial statements - Net operating capital (days) measure is relative to other companies and frequently used by securities analysts, investors - Net interest-bearing debt and other stakeholders. EBITDA, as defined by Yara, includes operating income, share of net Financial statements for - Net debt/equity ratio income in equity-accounted investees, interest income and other financial income. It excludes Yara International ASA depreciation, amortization and impairment loss, as well as amortization of excess values in - Net debt/EBITDA excluding special items ratio equity-accounted investees. Yara’s definition of EBITDA may differ from that of other companies. Statement from the Board and the - Basic earnings per share excluding currency and special items CEO of Yara International ASA EBITDA excluding special items Auditor’s report Definitions and explanations for the use of these APMs are described below, including EBITDA excluding special items is used to better mirror the underlying performance in the Reconciliation of alternative reconciliations of the APMs to the most directly reconcilable line item, subtotal or total reported period, adjusting for items which are not primarily related to the period in which they performance measures in presented in the financial statements. are recognized. For details on special items, see page 65 in chapter 2, Yara in review, section the Yara Group Prosperity performance. The EBITDA in USD per tonne Sales and Marketing segment was introduced as an Alternative Performance Measure in Fourth quarter 2019, as an indication of the margin improvement targeted by the segment. With the new regional organizational structure announced in May 2020, Yara further strengthened its position to commercially optimize its entire value chain tailored to regional market differences and opportunities, and will communicate updated APMs in due course.
249 Yara Integrated Report 2020 Reconciliation of operating income to EBITDA excluding special items
USD millions 2020 2019
01 THIS IS YARA Operating income 1,176 989 Share of net income in equity-accounted investees 20 65 02 YEAR IN REVIEW Interest income and other financial income 62 76 Depreciation and amortization 1) 919 923 03 FROM THE BOARDROOM Impairment loss 2) 46 43 Earnings before interest, tax and depreciation/amortization (EBITDA) 2,223 2,095 04 FINANCIAL STATEMENTS Special items included in EBITDA 3) (62) 70 Consolidated financial statements EBITDA, excluding special items A 2,161 2,165 Financial statements for 1) Including amortization of excess value in equity-accounted investees. Yara International ASA 2) Including impairment loss on excess value in equity-accounted investees. 3) For details on special items, see page 65 in chapter 2, Yara in review, section Prosperity performance. Statement from the Board and the CEO of Yara International ASA Reconciliation of net income to EBITDA Auditor’s report Reconciliation of alternative USD millions 2020 2019 performance measures in the Yara Group Net income 690 589 Income taxes 160 214 Interest expense and other financial items 165 182 Foreign currency translation (gain)/loss 243 145 Depreciation and amortization 1) 919 923 Impairment loss 2) 46 43 EBITDA 2,223 2,095
1) Including amortization of excess value in equity-accounted investees. 2) Including impairment loss on excess value in equity-accounted investees.
250 Yara Integrated Report 2020 ROIC plus a normalized cash level of USD 200 million, minus total current liabilities excluding Return on invested capital (ROIC) is defined as Net Operating Profit After Tax (NOPAT) divided short-term interest-bearing debt and current portion of long-term debt, plus property, plant and by average invested capital calculated on a 12-months rolling average basis. NOPAT is defined equipment, plus right-of-use assets, plus goodwill and plus equity-accounted investees. as operating income excluding amortization and impairment of intangible assets other than goodwill, plus interest income from external customers, minus tax cost calculated on the previous NOPAT and average invested capital are defined and reconciled as components in the reporting 01 THIS IS YARA mentioned items with a 25% flat rate, and plus net income from equity-accounted investees. of ROIC as an APM. They are not considered to be separate APMs. Average invested capital is defined as total current assets excluding cash and cash equivalents, 02 YEAR IN REVIEW
03 FROM THE BOARDROOM Reconciliation of operating income to net operating profit after tax
04 FINANCIAL STATEMENTS USD millions 2020 2019
Consolidated financial statements Operating income 1,176 989 Financial statements for Amortization and impairment of intangible assets 44 46 Yara International ASA Interest income from external customers 54 60 Statement from the Board and the Calculated tax cost (25% flat rate) on items above (319) (274) CEO of Yara International ASA Share of net income in equity-accounted investees 20 65 Auditor’s report Net operating profit after tax (NOPAT) B 976 886 Reconciliation of alternative performance measures in the Yara Group Reconciliation of net income to net operating profit after tax
USD millions 2020 2019
Net income 690 589 Amortization and impairment of intangible assets 44 46 Interest income from external customers 54 60 Interest income and other financial income (62) (76) Interest expense and other financial items 165 182 Foreign currency translation (gain)/loss 243 145 Income tax, added back 160 214 Calculated tax cost (25% flat rate) (319) (274) Net operating profit after tax (NOPAT) B 976 886
251 Yara Integrated Report 2020 Reconciliation of invested capital and ROIC calculation
USD millions 2020 2019
Total current assets as reported 5,637 4,785 01 THIS IS YARA Cash and cash equivalents as reported (1,363) (300) Normalized level of operating cash 200 200 02 YEAR IN REVIEW Total current liabilities as reported (3,165) (3,317) Short-term interest-bearing debt as reported 345 494 03 FROM THE BOARDROOM Current portion of long-term debt as reported 132 398 Short-term lease liabilities as reported 111 98 04 FINANCIAL STATEMENTS Property, plant and equipment as reported 8,579 8,614 Consolidated financial statements Right-of-use assets as reported 430 428 Goodwill as reported 831 844 Financial statements for Yara International ASA Equity-accounted investees as reported 107 970 Adjustment for 3-months/12-months average 356 180 Statement from the Board and the CEO of Yara International ASA Invested capital C 12,200 13,395 Auditor’s report Return on invested capital (ROIC) D=B/C 8.0% 6.6% Reconciliation of alternative performance measures in the Yara Group Yara Improvement Program (YIP) The fixed cost, and the net operating capital measures represent financial alternative performance Yara has established a corporate program to drive and coordinate existing and new improvement measures and are defined below. The production volume and energy efficiency are physical initiatives, the Yara Improvement Program. At its Capital Markets Day on 26 June 2019, Yara measures and are defined and reported in the Prosperity performance section in chapter 2 of the launched an extended version of this program which distinguish between three defined pillars; integrated report. a) higher production returns and lower variable costs, b) leaner cost base, and c) smarter working capital management. At the same time, Yara moved to reporting operational metrics Fixed cost is defined as the subtotal “Operating costs and expenses” in the consolidated statement of on underlying value drivers to provide information on project performance to management, and income minus variable product cost (raw materials, energy, freight), other variable operating expenses, which Yara also considers to be relevant for external stakeholders. The operational metrics are depreciation, amortization and impairment loss. The reported amounts are adjusted for items which reported on a rolling 12-months basis and include: are not considered to be part of underlying business performance for the period (for details on special items, see page 65 in chapter 2, Yara in review, section Prosperity performance.), currency effects, - production volume (kt), and items which relate to portfolio and structural changes. The currency effects are calculated by - energy efficiency (Gj/T), converting from local currency to reporting currency using baseline exchange rates as of 2018. The - fixed cost (USD millions), and portfolio and structural changes refer to the acquisition of the Vale Cubatão Fertilizantes complex in - net operating capital (days). Brazil and the ammonia plant in Freeport.
252 Yara Integrated Report 2020 Net operating capital days are reported on a 12-months average basis and is defined as the net As Yara Improvement Program performance measures are presented to report on the progress of credit days, inventory days and payable days. Credit days are calculated as trade receivables, towards Yara’s strategic goals, previous calendar year is considered to represent the relevant adjusted for VAT payables, relative to total revenue and interest income from customers. comparatives. Inventory days are calculated as the total inventory balance relative to product variable costs. Payable days are calculated as trade payables adjusted for payables related to investments, 01 THIS IS YARA relative to supplier related operating costs and expenses.
02 YEAR IN REVIEW
Reconciliation of operating costs and expenses to fixed cost 03 FROM THE BOARDROOM USD millions 2020 2019
04 FINANCIAL STATEMENTS Operating costs and expenses 10,551 11,946 Variable part of Raw materials, energy costs and freight expenses (7,399) (8,714) Consolidated financial statements Variable part of Other operating expenses (31) (25) Financial statements for Depreciation and amortization (919) (923) Yara International ASA Impairment loss (46) (43) Statement from the Board and the Currency effects (using baseline exchange rates as of 2018) 209 102 CEO of Yara International ASA Special items within fixed cost (44) (53) Auditor’s report Fixed cost 2,322 2,291 Reconciliation of alternative performance measures in the Yara Group
253 Yara Integrated Report 2020 Reconciliation of Net operating capital days
USD millions 2020 2019
Trade receivables as reported 1,478 1,564 01 THIS IS YARA Adjustment for VAT payables (83) (64) Adjustment for 12-months average 106 186 02 YEAR IN REVIEW Adjusted trade receivables (12-months average) E 1,501 1,686
03 FROM THE BOARDROOM Revenue from contracts with customers 11,591 12,858 Interest income from external customers 51 56 04 FINANCIAL STATEMENTS Total revenue and interest income from customers F 11,641 12,914
Consolidated financial statements Credit days G=(E/F)*365 47 48 Financial statements for Yara International ASA Inventories as reported 2,161 2,360 Adjustment for 12-months average (25) 140 Statement from the Board and the Inventories (12-months average) H 2,136 2,500 CEO of Yara International ASA
Auditor’s report Raw materials, energy costs and freight expenses 8,021 9,334 Reconciliation of alternative Fixed product costs and freight expenses external customers (1,522) (1,564) performance measures in Product variable costs I 6,498 7,770 the Yara Group Inventory days J=(H/I)*365 120 117
Trade and other payables as reported 1,880 1,614 Adjustment for other payables (451) (329) Adjustment for payables related to investments (160) (116) Adjustment for 12-months average (66) 162 Trade payables (12-months average) K 1,203 1,331
Operating costs and expenses 10,551 11,946 Depreciation and amortization (919) (922) Impairment loss (46) (43) Other non-supplier related costs (1,397) (1,271) Operating costs and expenses, adjusted L 8,190 9,710
Payable days M=(K/L)*365 54 50
Net operating capital days N=G+J-M 113 115 254 Yara Integrated Report 2020 Capital structure measures cash equivalents and other liquid assets, reduced for short-term and long-term (including current Yara reports the Group’s net interest-bearing debt, net debt/equity ratio and net debt/EBITDA portion) interest-bearing debt, and lease liabilities. The net debt/equity ratio is calculated as net excluding special items ratio to provide information on the Group’s financial position as references interest-bearing debt divided by shareholders’ equity plus non-controlling interests. The Net Debt/ to the targeted capital structure as communicated in Yara’s financial policy. In addition, Yara’s EBITDA ratio is calculated as net interest-bearing debt divided by EBITDA excluding special items reporting of net interest-bearing debt highlights key development factors which supplement the on a 12-months rolling basis. 01 THIS IS YARA consolidated statement of cash flows. Net interest-bearing debt is defined by Yara as cash and
02 YEAR IN REVIEW
Net interest-bearing debt 03 FROM THE BOARDROOM USD millions 31 Dec 2020 31 Dec 2019
04 FINANCIAL STATEMENTS Cash and cash equivalents 1,363 300 Short-term interest-bearing debt (345) (494) Consolidated financial statements Current portion of long-term debt (132) (398) Financial statements for Short-term lease liabilities (111) (98) Yara International ASA Long-term interest-bearing debt (3,371) (2,698) Statement from the Board and the Long-term lease liabilities (335) (337) CEO of Yara International ASA Net interest-bearing debt O (2,930) (3,725) Auditor’s report Reconciliation of alternative performance measures in Net debt/equity ratio the Yara Group USD millions 31 Dec 2020 31 Dec 2019
Net interest-bearing debt O (2,930) (3,725) Total equity P (8,220) (8,909)
Net debt/equity ratio Q=O/P 0.36 0.42
Net debt/EBITDA excluding special items ratio
USD millions 31 Dec 2020 31 Dec 2019
Net interest-bearing debt O (2,930) (3,725) EBITDA, excluding special items (last 12 months) A 2,161 2,165
Net debt/EBITDA excluding special items ratio R=(O)/A 1.36 1.72
255 Yara Integrated Report 2020 Basic earnings per share excluding currency and special items represent net income after non-controlling interests, excluding foreign currency translation gain/ Basic earnings per share (EPS) excluding currency and special items is an adjusted EPS measure loss and special items after tax, divided by average number of shares outstanding in the period. which mirrors the underlying performance in the reported period by adjusting for currency effects The tax effect on foreign currency and special items is calculated based on relevant statutory tax and items which are not primarily related to the period in which they are recognized. This APM rate for simplicity. 01 THIS IS YARA
Earnings per share 02 YEAR IN REVIEW USD millions, except earnings per share and number of shares 2020 2019 03 FROM THE BOARDROOM Weighted average number of shares outstanding S 267,985,860 272,319,232
04 FINANCIAL STATEMENTS Net income attributable to shareholders of the parent T 691 599 Foreign currency translation gain/(loss) U (243) (145) Consolidated financial statements Tax effect on foreign currency translation gain/(loss) V 73 38 Financial statements for Non-controlling interest share of currency (gain)/loss, net after tax W - (1) Yara International ASA Special items within income before tax 1) X 17 (126) Statement from the Board and the Tax effect on special items Y 17 23 CEO of Yara International ASA Special items within income before tax, net after tax Z=X+Y 34 (102) Auditor’s report Special items within income tax AA - (38) Non-controlling interest's share of special items, net after tax AB (1) (2) Reconciliation of alternative AC=T–U–V+W–Z– performance measures in Net income excluding currency and special items 826 842 AA+AB the Yara Group
Basic earnings per share AD=T/S 2.58 2.20 Basic earnings per share excluding currency and special items AE=AC/S 3.08 3.09
1) For details on special items, see page 65 in chapter 2, Yara in review, section Prosperity performance.
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